Via Division of Labor, Emek Basker has a paper showing that Wal-Mart does indeed create jobs when it enters a market. The abstract:
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. No spillover effect is detected in retail sectors in which Wal-Mart does not compete directly, suggesting Wal-Mart does not create agglomeration economies in retail trade at the county level.
I think this picture of Wal-Mart's expansion is interesting:
I bring this up because I am skeptical of a claim often made against Wal-Mart. That is the company decimates downtowns. The reason I'm skeptical is that growing up, I remember visiting towns where the downtown had already declined before Wal-Mart was open for business in the area. In one study I found on Wal-Mart done for Bozeman, MT(where I went for my undergrad) it was the mall on the edge of town which had caused the decline. Wal-Mart had entered the market some years later during the time I was there. The economic impact report had specifcally pointed this out.
This story also reminds me of some research we did looking at the devlopment of Montana. Some guys in my class decided to look at a small town in the area and trace out its life and death. Initially, they thought that the railroad pulling out of the town killed it, but in reality they were last ones to leave. Better roads and highways had made travelling to neighboring larger cities economical.
It may just be a coincidence that shopping patterns shifted the same time Wal-Mart entered the market. The growth in shopping malls coupled with better roads and highways caused a shift which Wal-Mart took advantage of. Also, I think the map shows Wal-Mart to be a fairly young company only expanding outside its home region in the mid eighties. I will have to go through Lexis-Nexis to see if I can find stories from that time frame talking about downtown declines. The real story here is probably just the dreaded shopping mall and roads.
Posted by Bob on May, 29 2005 at 06:47 PM
Anonymous wrote:Have you taken into consideration other things in relation to dots on the map. Specifically I would like to see a map comparable to population increase, reallocation of population, average wage, dots on a map of hospitals, taxes, yada yada yada.
Look and think deeper.-- May 30, 2005 01:48 AM ∞
Patrick McGinnis wrote:I heard there was a bomb scare at a Walmart in Midland Texas Sunday night 5/29/05. Anybody know any details?
-- May 30, 2005 02:20 AM ∞
Anonymous wrote:I love anyalysis, bell curves, and the like. I like this analysis, the endo somethin analysis and net somethin somethin statistically significant yada yada yada stuff.
I have my own analysis.
There used to be good jobs.
Now there are very few good jobs, and they're hard to get.
There are a few crummy jobs, and everyone desperately needs them.
That's my analysis.-- May 30, 2005 03:08 AM ∞
JR wrote:Like the last commentator, I don't speak regression analysis. However, I can see that the charts only go out five years. Did you ever think it might take a lot longer for a town to die? Take a look at this for example.
-- May 30, 2005 11:14 AM ∞
Bob wrote:The first Anon's comment is absolutely correct as there are patterns much deeper than I mention. We know, for instance, that there is depopulation of rural America going on. This started before Wal-Mart came into existence. And people have done some of the work such as this:
http://www.farmfoundation.org/pubs/increas/97/stone.pdf
-- May 30, 2005 12:46 PM ∞
Kevin Brancato wrote:JR,
The piece you linked to discusses the economic fortunes of two towns, McGehee and Dumas; it is a really good read. As I wrote about it on the Neighborhood Retail Alliance blog:
Two towns 30 miles apart have nearly identical populations and each has a Wal-Mart. Yet one town's small business found it much harder to survive than the other when WM entered, and now Wal-Mart wants to pull out of the poorer business area...
How is it possible that WM whittle away at one town's small business base, but not the other's? What's the fundamental difference between the towns? These are fascinating questions.
As Emek Basker notes:
"Firms respond to local conditions when they expand or relocate establishments. ... So it is difficult to disentangle the direct effects of expansion from the indirect effects of the conditions that lead to it."
In other words, given the magnitude of the company, it is really hard to separate the economic changes Wal-Mart causes and propels from those it merely responds to.
-- May 30, 2005 01:23 PM ∞
Roy W. Wright wrote:There used to be good jobs.
Now there are very few good jobs, and they're hard to get.
There are a few crummy jobs, and everyone desperately needs them.
That's my analysis.Care to offer some evidence? I don't see that happening.
-- May 30, 2005 02:00 PM ∞
Anonymous wrote:Wow, discension. I like that, I like someone saying I disagree with you, what's your' view.
I'll specifically answer your question, when you specifically ask one with your "proof." I'll caution you though - I work at Walmart, it's gotten better - it still has a long way to go.-- May 31, 2005 09:22 PM ∞
Anonymous wrote:Cost of living.
Jobs created; average wage; versus population increase.
Healthcare, and the ability of average americans to access that needed healthcare.
The trade deficit.
The war in Iraq, funding for the va.
The threat of terrorism, the skin of the teeth funding, and the ability of this economy and country to withstand it.
The port in Longbeach, funding, and above.
The disparity between the wealthiest Americans and the poorest, and the degredation of the middle wealth - remember, interest rates won't be low for much longer, and the main fuel for this economy is NOT oil, it is continued real estate appraisal, consumption fueled by tax reallocation (food stamps, pork, and local tax increases). Do you think that bubble will burst?-- May 31, 2005 09:27 PM ∞
Anonymous wrote:I'll give you an analogy as an example. 10 times over the last two years, small light planes have penetrated Washington airspace, with a three-layered radar view going out to about 80 miles. The main threat has always been a small light plane flying under the radar loaded with explosives and a designated target (a capital building) flying between 250 and 350 miles per hour, a jet possibly 700 miles per hour. Who in the world is just thinking now let's not fly two f-18's or f117a's at 750 miles per hour pre-stall, let's layer it with choppers flying at 400 miles per hour max and everything in-between.
Comes back to my main question - who's running this country anyway - and who's running Walmart.-- May 31, 2005 09:37 PM ∞
