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A Quasi-Experimental Test of Large Retail Store Impacts on Regional Labor Markets: The Case of Cabela's Retail Outlets

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  • Hicks, Michael J.

Abstract

This study applies a quasi-experimental method for performing economic impact analy-sis of a firm‟s entrance on regional labor markets. The impact studied is the entrance of a Ca-bela‟s retail outlet in seven U.S. counties from 1998 through 2003. Using a time-space dynamic model in a monthly panel data setting, this paper evaluates the impact of new firm entrance on employment, unemployment rates and labor forces in 7 control and 7 treatment counties. I include an endogeneity test, rejecting growth and labor market endogeneity in the entrance of Cabela‟s. The findings suggest that the entrance of a large-scale specialty retail store has no persistent impact on employment in the effected or surrounding counties. These findings suggest labor market constraints. More simply retail wages are not sufficient to increase labor market participation or alter economic migration patterns in the affected counties. This paper recommends that benefit cost analysis be performed when public resources are dedicated to infrastructure or tax incentive efforts.

Suggested Citation

  • Hicks, Michael J., 2007. "A Quasi-Experimental Test of Large Retail Store Impacts on Regional Labor Markets: The Case of Cabela's Retail Outlets," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 37(2).
  • Handle: RePEc:ags:jrapmc:132412
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    References listed on IDEAS

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    1. Emek Basker, 2005. "Job Creation or Destruction? Labor Market Effects of Wal-Mart Expansion," The Review of Economics and Statistics, MIT Press, vol. 87(1), pages 174-183, February.
    2. Neumark, David & Zhang, Junfu & Ciccarella, Stephen, 2008. "The effects of Wal-Mart on local labor markets," Journal of Urban Economics, Elsevier, vol. 63(2), pages 405-430, March.
    3. Stone, Kenneth E. & Deller, Steven C. & McConnon, James C. Jr., 1992. "The New Retail Environment in Maine," Staff General Research Papers Archive 11255, Iowa State University, Department of Economics.
    4. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 39(3), pages 106-135.
    5. Stone, Kenneth E., 1995. "Competing With the Retail Giants," Staff General Research Papers Archive 5307, Iowa State University, Department of Economics.
    6. Michael J. Hicks & Kristy Wilburn, 2005. "The Locational Impact of Wal-Mart Entrance: A Panel Study of the Retail Trade Sector in West Virginia," Urban/Regional 0511011, EconWPA.
    7. Todd M. Gabe & David S. Kraybill, 2002. "The Effect of State Economic Development Incentives on Employment Growth of Establishments," Journal of Regional Science, Wiley Blackwell, vol. 42(4), pages 703-730.
    8. Barnes, Nora Ganim & Connell, Allison & Hermenegildo, Lisa & Mattson, Lucinda, 1996. "Regional differences in the economic impact of Wal-Mart," Business Horizons, Elsevier, vol. 39(4), pages 21-25.
    9. Hicks, Michael J. & Wilburn, Kristy L., 2001. "The Regional Impact of Wal-Mart Entrance: A Panel Study of the Retail Trade Sector in West Virginia," The Review of Regional Studies, Southern Regional Science Association, vol. 31(3), pages 305-313, Winter.
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    Cited by:

    1. Zhang, Chuanchuan, 2011. "大型外资零售商的进入对中国地区劳动力市场的影响
      [Impact of Entry of Large Foreign Retailers on Local Labor Markets in China]
      ," MPRA Paper 43912, University Library of Munich, Germany, revised Apr 2012.
    2. Juan Tomas Sayago-Gomez & Gianfranco Piras & Donald Lacombe & Randall Jackson, 2015. "Impact Evaluation of Investments in the Appalachian Region: A Reappraisal," Working Papers Working Paper 2015-06, Regional Research Institute, West Virginia University.

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    Keywords

    Labor and Human Capital;

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