Tourism dependency and residents' happiness

The relationship between the subjective well-being of the local population and international tourism is complex. We argue that tourism dependency exacerbate the negative implications arising from international tourism. Using data from 146 economies from 2005 to 2021, we estimate a dynamic panel model that accounts for potential endogeneity and simultaneity issues and an interaction term that captures the dynamic effects between international tourism arrivals and tourism receipts as a share of exports, our measure of tourism dependency. We find evidence that international tourism can promote residents' happiness, however, as economies become dependent on tourism as an export, this effect becomes negative. Policy implications are discussed. •The literature posits a link between tourism development and residents' happiness.•However, there are negative externalities associated with excessive tourism.•We explore this in the context of tourism dependency.•Tourism contributes to happiness when the share of tourism as an export is low.•However, tourism leads to unhappy locals as economies become dependent on tourism.