Tourism development, human capital and income inequality in Nigeria

The continuous surge in income inequality globally has prompted leaders and scholars to scramble for proactive solutions to mitigate this concern to achieve Sustainable Development Goals, specifically, SDG-10. While scholars have explored numerous determinants of income inequality, the specific role of the tourism sector remains rarely investigated in a country-specific context. Against this backdrop, our research explores the effect of tourism and human capital on income inequality in Nigeria from 1995 to 2020. Our study deploys different estimation methods, such as Fully Modified Ordinary Least Squares (FMOLS) and Canonical Cointegration Regression (CCR), complemented by the Kernel Regularized Least Squares (KRLS) method for robustness verification. Our results indicate that improving tourism arrivals, FDI, population growth, and human capital are critical to ameliorating income inequality in Nigeria. Conversely, we observed that rising economic performance, tourism expenditure, and tourism receipts worsen income inequality. These findings reveal heterogeneous distributional effects of tourism development. Additionally, our moderation analysis reveals that human capital plays a critical role in enhancing the inequality-reducing effects of tourism. Specifically, improvements in education and skills development strengthen the capacity of the tourism sector to generate inclusive employment opportunities, increase government revenue, and support infrastructure development, thereby benefiting vulnerable populations. The study, therefore, highlights the importance of integrating tourism strategies with targeted vocational and skills development initiatives to enhance low-income households’ capacity to access employment opportunities, thereby fostering equitable income distribution in Nigeria.