How many jobs will Wal*Mart add?

From Always Low Prices, an abstract of a paper by Emek Basker of the Division of Labor:
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.

One Response to “How many jobs will Wal*Mart add?”

  1. Bill says:

    Since the Basker study is cited as evidence of Wal-Mart’s positive effect on local economies (even on Wal-mart’s website) it’s worth slogging through the whole thing, which can be downloaded here.

    Looking at county job numbers for places with new Wal-Marts, Basker finds an average increase of 120 net retail jobs by the end of the first year, falling to about 50-80 net jobs after a few years. But since the typical new Wal-Mart employs around 300 people, these numbers actually imply 200-250 jobs lost at other retailers. Basker also finds an average loss of 20 wholesale sector jobs, and an decline in the overall number of small and large retail establishments, in the average county with a new Wal-Mart.

    The study doesn’t provide any comparive data on wages received or hours worked by retail workers, before and after a Wal-Mart arrives.

    All in all, if Basker demonstrates anything it’s a) the hollowness of Wal-Mart’s claims of job creation and spin-off development, and b) the legitimacy of critics’ concerns.

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