Sales Management
Job Creation or Destruction? Labor-Market Effects of Wal-Mart Expansion
Emek Basker
∗,†
University of Missouri - Columbia November 2002
Abstract
The phenomenal expansion of Wal-Mart provides a clean case for studying the labor-market effects of increased efficiency. I estimate the effect of Wal-Mart entry on retail employment at the county level. Using an instrumental-variables approach to correct for both measurement error in entry dates and possible 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, leaving a statistically significant net gain of 50 jobs at the five-year horizon. The decline in retail employment in the years immediately following entry is associated with the closing of both small and large retail establishments. At the same time, retail employment in neighboring counties declines by approximately 30 jobs, and wholesale employment in the entered county declines by a similar number.
∗ emek@missouri.edu. I thank Daron Acemoglu, Olivier Blanchard and Sendhil Mullainathan for their support and guidance throughout this project. I have also benefited from conversations with Josh Angrist, Saku Aura, David Autor, Glenn Ellison, Bengte Evenson, Amy Finkelstein, Guido Kuersteiner, Jeffrey Miron, Whitney Newey, Marko Terviö, Ken Troske and seminar participants at the Board of Governors of the Federal Reserve System, Case Western Reserve University, the Federal Reserve Banks of Atlanta and St. Louis, Hebrew Univeristy, MIT, the Univesity of Chicago GSB, the University of Missouri, Tel Aviv University, the US Census Bureau, Washington University in St. Louis and Wellesley College. I also thank Amy Mok, Steven Sadoway and David Von Stroh for their help with typing, and Dorothy Carpenter, Kathy Cosgrove, Rich Lindrooth, Erich Muehlegger, Mike Noel, Jon Zinman, and especially Maurice Drew, Catherine Friedman and Steven Sadoway for helping me
Emek Basker
∗,†
University of Missouri - Columbia November 2002
Abstract
The phenomenal expansion of Wal-Mart provides a clean case for studying the labor-market effects of increased efficiency. I estimate the effect of Wal-Mart entry on retail employment at the county level. Using an instrumental-variables approach to correct for both measurement error in entry dates and possible 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, leaving a statistically significant net gain of 50 jobs at the five-year horizon. The decline in retail employment in the years immediately following entry is associated with the closing of both small and large retail establishments. At the same time, retail employment in neighboring counties declines by approximately 30 jobs, and wholesale employment in the entered county declines by a similar number.
∗ emek@missouri.edu. I thank Daron Acemoglu, Olivier Blanchard and Sendhil Mullainathan for their support and guidance throughout this project. I have also benefited from conversations with Josh Angrist, Saku Aura, David Autor, Glenn Ellison, Bengte Evenson, Amy Finkelstein, Guido Kuersteiner, Jeffrey Miron, Whitney Newey, Marko Terviö, Ken Troske and seminar participants at the Board of Governors of the Federal Reserve System, Case Western Reserve University, the Federal Reserve Banks of Atlanta and St. Louis, Hebrew Univeristy, MIT, the Univesity of Chicago GSB, the University of Missouri, Tel Aviv University, the US Census Bureau, Washington University in St. Louis and Wellesley College. I also thank Amy Mok, Steven Sadoway and David Von Stroh for their help with typing, and Dorothy Carpenter, Kathy Cosgrove, Rich Lindrooth, Erich Muehlegger, Mike Noel, Jon Zinman, and especially Maurice Drew, Catherine Friedman and Steven Sadoway for helping me
References: 33 [28] Kézdi, Gábor (2001)