The Effects of Wal-Mart on Local Labor Markets

David Neumark (), Junfu Zhang () and Stephen M. Ciccarella ()

No 2545, IZA Discussion Papers from Institute for the Study of Labor (IZA)

Abstract: We estimate the effects of Wal-Mart stores on county-level retail employment and earnings, accounting for endogeneity of the location and timing of Wal-Mart openings that most likely biases the evidence against finding adverse effects of Wal-Mart stores. We address the endogeneity problem using a natural instrumental variables approach that arises from the geographic and time pattern of the opening of Wal-Mart stores, which slowly spread out from the first stores in Arkansas. The employment results indicate that a Wal-Mart store opening reduces county-level retail employment by about 150 workers, implying that each Wal-Mart worker replaces approximately 1.4 retail workers. This represents a 2.7 percent reduction in average retail employment. The payroll results indicate that Wal-Mart store openings lead to declines in county-level retail earnings of about $1.2 million, or 1.3 percent. Of course, these effects occurred against a backdrop of rising retail employment, and only imply lower retail employment growth than would have occurred absent the effects of Wal-Mart.

Keywords: Wal-Mart; location; employment (search for similar items in EconPapers)
JEL-codes: J21 R12 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-geo and nep-ure
Date: 2007-01
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Related works:
Working Paper: The Effects of Wal-Mart on Local Labor Markets (2006)
Working Paper: The Effects of Wal-Mart on Local Labor Markets (2005)
Journal Article: The effects of Wal-Mart on local labor markets (2008)
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