The Regional Impact of Wal-Mart Entrance: A Panel Study of the Retail Trade Sector in West Virginia

Abstract

This paper examines the retail trade sector in 55 West Virginia counties from 1989 through 1998. A time-space recursive model evaluates the impact of the entrance of Wal-Mart stores in the county and in adjacent counties. This paper differs from earlier research in that it controls for endogeneity in the entrance decision of Wal-Mart in faster-growing counties, applies spatial analysis, and estimates impacts at the county level. This research finds a net increase in employment (55 jobs) and a mild increase in the number of firms (five) in the Retail Trade sector (SIC 52). The study supports the pull-factor explanation of retail trade growth. The paper concludes with further research recommendations.

The Influence of Targeted Economic Development Tax Incentives on County Economic Growth: Evidence From Michigan’s MEGA Credits

“…Typically, the lag choice coincides with the lags employed in the time autoregressive term. Economic applications of this appear in Hicks and Wilburn (2001) and Hicks (2004).…”

The Effects of Wal-Mart on Local Labor Markets

“…More important, their approach does not address the key endogeneity questions of whether Wal-Mart location decisions were based on anticipated changes after stores opened, or instead only prior trends that were already different (despite the authors posing these questions). 10 Hicks and Wilburn [20], studying the impact of Wal-Mart openings in West Virginia, estimate positive impacts of Wal-Mart stores on retail employment and the number of retail firms. They do not explicitly account for endogeneity, although they do address the issue.…”

“…The data set contains every Discount Store and Supercenter still in operation in the United States at the end of fiscal year 2005 (January 31, 2005), as well as the opening date. 20 Because employment in the CBP data is measured as of early March in each year, we code store openings as occurring in the first full calendar year for which they are open. If we instead coded the store opening as occurring in the previous calendar year (sometime during which the store did in fact open), in most cases (unless the store opened before early March) we would be using an employment level prior to the store opening as a measure of employment post-opening.…”

“…However, constructing data for this subsector results in nearly two-thirds of county-year pairs being discarded because of non-disclosure, in which case endogenous sample selection can be severe. 20 Unfortunately, we are often missing information on when Discount Stores converted to Supercenters, which is frequent in the latter part of the sample. All we know is the current store type.…”

Dollar store expansion and independent grocery retailer contraction

“…For example, Arcidiacono et al (2016) found that Walmart entry harms supermarkets but that smaller independent grocery retailers thrive. Moreover, Hicks and Wilburn (2001) found that Walmart entry increased retail employment but did not affect wages and other labor market outcomes. Basker (2005) provided additional evidence for increased retail employment after Walmart entry.…”