Mom-and-Pop Meet Big Box: Complements or Substitutes?
University of Maryland - Department of Economics; National Bureau of Economic Research (NBER); Institute for the Study of Labor (IZA)
Ron S. Jarmin
U.S. Census Bureau
C. J. Krizan
Government of the United States of America - Bureau of the Census
September 1, 2009
US Census Bureau Center for Economic Studies Paper No. CES-WP- 09-34
In part due to the popular perception that Big-Boxes displace smaller, often family owned (a.k.a. Mom-and-Pop) retail establishments, several empirical studies have examined the evidence on how Big-Boxes’ impact local retail employment but no clear consensus has emerged. To help shed light on this debate, we exploit establishment-level data with detailed location information from a single metropolitan area to quantify the impact of Big-Box store entry and growth on nearby single unit and local chain stores. We incorporate a rich set of controls for local retail market conditions as well as whether or not the Big-Boxes are in the same sector as the smaller stores. We find a substantial negative impact of Big-Box entry and growth on the employment growth at both single unit and especially smaller chain stores – but only when the Big-Box activity is both in the immediate area and in the same detailed industry.
Number of Pages in PDF File: 46
Keywords: Big-Boxes, Small Business, Retail Trade, Firm Location, Structural Change
JEL Classification: R30, L16
Date posted: October 22, 2009