How does big-box retail entry affect labor productivity in durable goods retailing? A synthetic control approach

Rudholm, Niklas; Li, Yujiao; Carling, Kenneth

doi:10.1007/s00168-022-01110-4

Cited by 1 publication

(1 citation statement)

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“…Focusing on Walmart, Neumark et al (2008) found that an entry resulted in a 2.5% decrease in county‐level retail employment and a 1.5% reduction in retail earnings, while Basker (2005) showed that an entry increases employment in the year of entry, but half of these employment gains disappear over the next five years as other retail establishments contract (see also Basker, 2007; Hicks, 2007, 2008; Jia, 2008 for Walmart's additional entry effects). In a Swedish context, Daunfeldt et al (2017) found that IKEA's entry into some municipalities increased employment by about 17%, while Rudholm et al (2022) showed mixed regional effects, in which smaller regions generally benefitted more from an IKEA establishment than larger regions (see also Håkansson et al, 2019).…”

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confidence: 99%

The effects of a large industrial investment on employment in a remote and sparsely populated area using a synthetic control approach

Adjei

Eriksson

Lundberg

2023

Regional Science Policy & Practice

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This article examines the impact of establishing a large industrial manufacturing entity on employment and the labor market in a remote, sparsely populated part of Sweden, focusing on how it affects total regional employment because industrial policies aiming to attract investment and reignite employment in stagnating regions have been a central policy tool. The empirical analysis is based on the synthetic control method, which enables the estimation of place‐specific causal effects. Using aggregated microdata from 1995 to 2019, the results indicate that employment in the treated region, as compared to synthetic regions, has been negatively affected by the manufacturing establishment. However, the short‐ and long‐term effects differ across different labor market segments (same, related, and unrelated industries) and according to firm size. Overall, the findings suggest that large manufacturing investment does not necessarily have a positive or instantaneous impact on total regional employment. It does, however, provide some potential for long‐term diversification because employment in related activities grows in the long run.

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