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How does the entry of large discount stores increase retail employment? Evidence from Korea

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  • Cho, Janghee
  • Chun, Hyunbae
  • Lee, Yoonsoo

Abstract

The Korean retail sector has undergone significant structural changes in conjunction with the rapid expansion of big-box stores since the mid-1990s. Using county-level data from Korea in 1997–2010, we examine the effects of the entry of large discount stores on local retail employment. Based on a differences-in-differences approach, our analysis shows that the entry of a large discount store leads to an increase of approximately 200 retail jobs in the county. Two thirds of this gain is attributable to the entry of the large store itself, and the other third is a result of the expansion of other retail sectors. In particular, we find that the entry of a large discount store increases employment in non-general merchandise sectors, such as bakeries, clothing stores, and electronics stores. Our finding suggests that the opening of a large discount store may have a spillover effect on the local retail sector, thereby leading to an overall increase in county employment. Such a finding of positive employment effects is in sharp contrast to previous findings on the employment effect of large retail chains, based primarily on the expansion of Wal-Mart in the US. While Wal-Mart competes with incumbent chain stores, large discount stores—the first nationwide large-scale chains introduced in Korea—may play the role of anchor stores. By providing modern shopping infrastructure and attracting new small stores into neighborhoods, these large discount stores have transformed local retail sectors from traditional shopping environments.

Suggested Citation

  • Cho, Janghee & Chun, Hyunbae & Lee, Yoonsoo, 2015. "How does the entry of large discount stores increase retail employment? Evidence from Korea," Journal of Comparative Economics, Elsevier, vol. 43(3), pages 559-574.
  • Handle: RePEc:eee:jcecon:v:43:y:2015:i:3:p:559-574
    DOI: 10.1016/j.jce.2015.04.004
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    Cited by:

    1. Janghee Cho & Hyunbae Chun & Yoonsoo Lee, 2023. "Productivity dynamics in the retail trade sector: the roles of large modern retailers and small entrants," Small Business Economics, Springer, vol. 60(1), pages 291-313, January.
    2. Aum, Sangmin & Lee, Sang Yoon (Tim) & Shin, Yongseok, 2021. "COVID-19 doesn’t need lockdowns to destroy jobs: The effect of local outbreaks in Korea," Labour Economics, Elsevier, vol. 70(C).
    3. Janghee Cho & Hyunbae Chun & Yoonsoo Lee, 2022. "Productivity Dynamics in the Retail Trade Sector: The Roles of Large Modern Retailers and Small Entrants," Working Papers 2202, Nam Duck-Woo Economic Research Institute, Sogang University (Former Research Institute for Market Economy).
    4. Chun, Hyunbae & Joo, Hailey Hayeon & Kang, Jisoo & Lee, Yoonsoo, 2023. "E-commerce and local labor markets: Is the “Retail Apocalypse” near?," Journal of Urban Economics, Elsevier, vol. 137(C).
    5. Chun, Hyunbae & Joo, Hailey Hayeon & Kang, Jisoo & Lee, Yoonsoo, 2020. "Diffusion of E-Commerce and Retail Job Apocalypse: Evidence from Credit Card Data on Online Spending," CEI Working Paper Series 2020-7, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    6. Kyung In Hwang, 2022. "The pro‐competitive effects of foreign firm entry: Evidence from the Korean retail sector," The World Economy, Wiley Blackwell, vol. 45(5), pages 1587-1613, May.
    7. Hyunbae Chun & Hailey Hayeon Joo & Jisoo Kang & Soo Hyung Kim, 2023. "Protecting Small-Scale Enterprises: Evidence from the Korean Ready-Mixed Concrete Industry," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 63(1), pages 73-95, August.
    8. Park Ryeong Ji & Chung Chang Kwon, 2018. "Policy Resistance Case Study Focused on Government’s Intervention in the Conflict Between Big-Box Stores and Traditional Market in Korea Based on Systems Thinking Approach," Journal of Systems Science and Information, De Gruyter, vol. 6(2), pages 152-164, April.
    9. Pengyu Ren & Yuanli Li & Kairui You, 2021. "Residents’ Demands for Urban Retail: Heterogeneity in Housing Structure Characteristics, Price Quantile, and Space," Land, MDPI, vol. 10(12), pages 1-17, December.
    10. Lukas Delgado-Prieto & Andrea Otero-Cortés & Andrés Calderón, 2024. "The Impact of Hard Discount Stores on Local Labor Markets: Evidence from Colombia," Documentos de trabajo sobre Economía Regional y Urbana 326, Banco de la Republica de Colombia.

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    More about this item

    Keywords

    Large discount stores; Entry; Local employment; Retail trade;
    All these keywords.

    JEL classification:

    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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