The goal of this thesis is to examine whether tourism alleviates poverty and income inequality. We apply the dynamic panel data model to data from 67 countries over the period 1996-2011 and find that tourism is negatively associated with the Gini coefficient and the income share of the highest quintile and positively associated with the income share of the lowest quintile. We also find that tourism is negatively linked to poverty gap and poverty headcount ratio. These results suggest that tourism can be used as a mechanism to reduce poverty and income inequality.