Abstract Several countries around the world have implemented policies to subsidize passengers who live on islands and travel domestically by air transport. This paper analyzes the effect of an exogenous change in the percentage of air transport resident subsidies in Spain on non-residents tourists' expenditure per day and overnight stays in corresponding regions. Drawing on monthly data from the period 2015–2019, a difference-in-difference estimator is applied, in addition to several robustness checks and placebo tests. We found a negative causal relationship between raising the subsidy percentage and non-residents tourists' expenditure per day on affected routes (routes between the mainland and islands). In fact, estimations show a reduction of between 9.6 and 12.2 per cent of non-residents tourists’ expenditure per day on the Canary Islands.
Highlights Does a rise in the percentage of resident subsidies affect touristic expenditure and overnight stays? A monthly sample of spanyards who travel within Spain (2015–2019) is used. We use dif-in-dif estimator with OLS and QR, robustness checks and placebos tests. Non-residents tourists’ expenditure per day in Canary Islands drops due to subsidy change.
Evaluating the effect of air transport resident subsidies on non-residents tourists’ expenditure
2022-10-10
Article (Journal)
Electronic Resource
English
Subsidies , Resident passengers , Tourists' expenditure , L93 , L83 , H25
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