Estimating Wal-Mart's Impacts in Maryland: A Test of Identification Strategies and Endogeneity Tests

Michael Hicks

Eastern Economic Journal, 2008, vol. 34, issue 1, 56-73

Abstract: In this paper, I estimate the impact of Wal-Mart on labor markets in Maryland. My goal is to compare estimation techniques that incorporate corrections for endogeneity of Wal-Mart's entrance and those that test for and fail to reject exogeneity in Wal-Mart's entrance decision. The instrumental variable approaches I test include those offered by Basker and Neumark et al., and a new test introduced in this paper. I also explain why differences in choice of sample time and location may lead to different findings as to the impact of Wal-Mart. I find that there is weak evidence of endogeneity in Wal-Mart's entrance decision, but that the bias is opposite of that anticipated by most researchers. Most interestingly, there are no significant differences across instrumental variable techniques employed in the literature. As for Wal-Mart in Maryland, that exposure to Wal-Mart leads to lower retail employment (from zero to 414 retail jobs), but significantly higher retail wages (as much as $1.95 per hour) at the county level. I also find that exposure to Wal-Mart has no effect on aggregate labor markets, though aggregate wages are positively affected, although the impact is very small (roughly $160 per year). I recommend that Maryland adopt a policy neutral approach to Wal-Mart. Eastern Economic Journal (2008) 34, 56–73. doi:10.1057/palgrave.eej.9050002

Date: 2008
References: Add references at CitEc
Citations: View citations in EconPapers (21)

Downloads: (external link)
http://www.palgrave-journals.com/eej/journal/v34/n1/pdf/9050002a.pdf Link to full text PDF (application/pdf)
http://www.palgrave-journals.com/eej/journal/v34/n1/full/9050002a.html Link to full text HTML (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:easeco:v:34:y:2008:i:1:p:56-73

Ordering information: This journal article can be ordered from
http://www.springer.com/economics/journal/41302

Access Statistics for this article

Eastern Economic Journal is currently edited by Allan Zebedee and Cynthia Bansak

More articles in Eastern Economic Journal from Palgrave Macmillan, Eastern Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().