The development of the tourism sector and its impact

Study of the tourism industry on the island of Sumatra, which is one of the islands with the most tourist destinations. The relationship between the growth of the tourism industry sector with per capita income and unemployment has been analyzed by researchers.This study was carried out using panel regression, where time series data (2009-2020) and cross-section data (5 provinces). A series of tests were performed before the regression equation was analyzed. The series of tests carried out are the best model selection test (through the Chow test, Hausman test, and Lagrange Multiplier Test) and the Classical Assumption Test (through normality, heteroscedasticity, and autocorrelation tests). Based on the results of applying the panel regression model, the first model: Fixed Effects Model was selected, and the second model: General Effects Model.The two selected models explain that the tourism sector has a positive and significant effect on per capita income and a negative and significant effect on the unemployment rate. The results of the study, that the tourism sector is an important factor in increasing per capita income and reducing unemployment rates. At the same time, it is known that the tourism sector has a significant share in contributing to the Gross Domestic Product. For this reason, it is necessary to stimulate the government to increase the contribution of the tourism sector through improving the quality of human resources in the tourism sector, infrastructure, and adding new destinations.