A beam of light: Media, tourism and economic development

Abstract

Tourism accounts for around one tenth of global GDP. We analyze the impact of entertainment media in drawing tourists to filming municipalities (media multiplier) and, in turn, the effect of tourism on local economic development (tourism multiplier). To quantify the media multiplier, we employ a triple-difference empirical strategy exploiting the staggered international release across the EU of Inspector Montalbano, a TV series set in four municipalities of Sicily, a region of Italy. We find that the series release led to a fourfold increase in the number of tourists and boosted tourist expenditure by a factor of 2.5. Furthermore, we provide evidence of positive spillovers in nearby municipalities. To estimate the tourism multiplier, we exploit the interaction between the filming locations and the time-varying share of countries in which the series was aired, to instrument total tourist expenditure at the municipality-time level. Our results show that a 10% increase in total tourist expenditure translates into an increase in municipal income of 4.7%. We also document the impact of tourism on urban dynamics. Namely, tourism increases (decreases) rental and selling prices in the more (less) tourist-attractive areas within municipalities. All in all, the paper suggests that both entertainment media and tourism can be effective tools to boost local economic development.