This is basically how most tourism works in Cuba, with the Casa particulars. I stayed out on a farm for a week in Vinales, and I cannot recommend it enough! Amazing experience, and helps the locals a lot: for $20CUC a night, they're making nearly half what the government gives them a month (depending).
An interesting point is that the Cuban government uses an extremely regressive taxation system to extract maximum revenue from the people providing services to tourists. According to the people I spoke to, the first bracket is taxed at 100%, and revenue above this is not taxed (at all, I believe). However, the bracket limit is set quite high, so that a lot of work is required to clear the hurdle. But the motivation to reach that goal is high, so people work hard, and the government collects the fruits of this labor.
I believe Mancur Olson described a similar, extremely regressive taxation system at work in the Soviet Union. I cannot find any reference to this unfortunately.
