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

  • Hicks, Michael J.

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.

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File URL: http://purl.umn.edu/132412
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Article provided by Mid-Continent Regional Science Association in its journal Journal of Regional Analysis and Policy.

Volume (Year): 37 (2007)
Issue (Month): 2 ()
Pages:

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Handle: RePEc:ags:jrapmc:132412
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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. Engle, Robert F & Granger, Clive W J, 1987. "Co-integration and Error Correction: Representation, Estimation, and Testing," Econometrica, Econometric Society, vol. 55(2), pages 251-76, March.
  3. Stone, Kenneth E., 1995. "Competing With the Retail Giants," Staff General Research Papers 5307, Iowa State University, Department of Economics.
  4. David Neumark & Junfu Zhang & Stephen Ciccarella, 2006. "The Effects of Wal-Mart on Local Labor Markets," Working Papers 060711, University of California-Irvine, Department of Economics.
  5. 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.
  6. Stone, Kenneth E. & Deller, Steven C. & McConnon, James C. Jr., 1992. "The New Retail Environment in Maine," Staff General Research Papers 11255, Iowa State University, Department of Economics.
  7. 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.
  8. 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.
  9. 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.
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