Job Creation or Destruction? Labor-Market Effects of Wal-Mart Expansion

34 Pages Posted: 3 Mar 2003 Last revised: 18 Nov 2007

Emek Basker

U.S. Census Bureau - Center for Economic Studies; University of Missouri - Department of Economics

Abstract

This paper estimates the effect of Wal-Mart expansion on retail employment at the county level. Using an instrumental-variables approach to correct for both measurement error in entry dates and endogeneity of the timing of entry, I find that Wal-Mart entry increases retail employment by 100 jobs in the year of entry. Half of this gain disappears over the next five years as other retail establishments exit and contract, leaving a long-run statistically significant net gain of 50 jobs. Wholesale employment declines by approximately 20 jobs due to Wal-Mart's vertical integration. No spillover effect is detected in retail sectors in which Wal-Mart does not compete directly, suggesting Wal-Mart does not create agglomeration economies in retail trade at the county level.

Keywords: Wal-Mart, Employment, Retail, Wholesale

JEL Classification: J21, O33, J63

Suggested Citation

Basker, Emek, Job Creation or Destruction? Labor-Market Effects of Wal-Mart Expansion. Review of Economics and Statistics, Vol. 87, No. 1, February 2005. Available at SSRN: https://ssrn.com/abstract=371102 or http://dx.doi.org/10.2139/ssrn.371102

Emek Basker (Contact Author)

U.S. Census Bureau - Center for Economic Studies ( email )

4600 Silver Hill Road
Washington, DC 20233-9100
United States

University of Missouri - Department of Economics ( email )

118 Professional Building
Columbia, MO 65211
United States

HOME PAGE: http://emekbasker.org

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