What Do Quarterly Workforce Dynamics Tell Us About Wal-Mart? Evidence from New Stores in Pennsylvania
In this paper I seek to better inform debate regarding Wal-Mart’s local impact on wages, and employment dynamics by combining data on Wal-Mart stores with the recently release Quarterly Workforce Indicators provided by the US Census. Use a panel of Pennsylvania counties, who saw entrance of a Wal-Mart in 2002, I find a new store has no effect on existing employee wages in the retail sector. However, new retail sector hires experience a roughly $0.50 an hour increase in total compensation in the quarter Wal-Mart enters. The entrance of a Wal- Mart draws employees from existing businesses, reducing job creation while increasing net job flows. Wal-Mart also has a longer term effect on net employment of a little more than 50 jobs in a total year. This employment finding is quite similar to findings in Hicks and Wilburn  and Basker . Perhaps most importantly, Wal-Mart entrance is associated with a dramatic decline in retail sector job turnovers (over 40 percent). This result challenges much of the received wisdom of Wal-Mart’s role in the retail sector. The policy implications of these findings echo those of Ken Stone, who cautions against activist policy in support, or against Wal-Mart at the local level. Disclosure: The author of this study owns no stock in Wal-Mart or any related firm (other than that held by the mutual fund companies Vanguard and TIAA-CREF). I have performed no paid consulting services from any retail firm, its developers, local governments or related entities since 2002 (though I continue to field frequent questions on my earlier research). I have received no honoraria related to Wal-Mart research (other than travel costs paid by the Federal Reserve Bank of Richmond in 2001). In short, except for roughly $1,500 purchases of diapers annual since 1999 I have no financial relationship with Wal-Mart or any affiliate that I am aware of.
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- Emek Basker, 2003.
"Job Creation or Destruction? Labor-Market Effects of Wal-Mart Expansion,"
Labor and Demography
0303002, EconWPA, revised 11 Mar 2005.
- 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.
- John M. Abowd & Robert H. Creecy & Francis Kramarz, 2002. "Computing Person and Firm Effects Using Linked Longitudinal Employer-Employee Data," Longitudinal Employer-Household Dynamics Technical Papers 2002-06, Center for Economic Studies, U.S. Census Bureau.
- Stone, Kenneth E., 1995. "Competing With the Retail Giants," Staff General Research Papers 5307, Iowa State University, Department of Economics.
- 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.
- Steven J. Davis & John C. Haltiwanger & Scott Schuh, 1998. "Job Creation and Destruction," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262540932, June.
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