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

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  • Emek Basker

    (University of Missouri)

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.

Suggested Citation

  • Emek Basker, 2003. "Job Creation or Destruction? Labor-Market Effects of Wal-Mart Expansion," Labor and Demography 0303002, EconWPA, revised 11 Mar 2005.
  • Handle: RePEc:wpa:wuwpla:0303002
    Note: Type of Document - pdf; prepared on IBM PC - PC-TEX; to print on PostScript; pages: 46 ; figures: included. University of Missouri Working Paper 02-15
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    More about this item

    Keywords

    Wal-Mart retail employment;

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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