Transcript Slide 1

Does Wal-Mart Cause an Increase in Anti-Poverty
Program Expenditures – EMPIRICAL EVIDENCE
• by Michael Hicks
• state level panel data analysis (ignores AK and HI), with controls for time
& spatial autocorrelation and local government mix and policy changes
Findings:
1. The number of Wal-Marts, and their employment share in the retail
sector, have no impact on food stamp expenditures.
2. Using the number of stores in a state to test for the impact of WalMart’s presence, states with more stores (and increasing the number
of stores in a state over time) do not have higher AFDC/TANF
expenditures (do not see increases in AFDC/TANF expenditures)
3. Using the retail employment share as a measure of Wal-Mart’s
presence, the impact is negative. In other words, as the share of retail
employment going to Wal-Mart increases, welfare expenditures
decrease – a 1% increase in Wal-mart’s share has been found to
reduce AFDC/TANF expenditures by 3.3%.
4. Wal-Mart’s presence increases Medicaid expenditures by $898 per
worker, consistent with other studies of the Medicaid costs per low
wage worker
Wal-Mart’s Local Impact on Wages and Employment
Dynamics in Pennsylvania – EMPIRICAL EVIDENCE
• by Michael Hicks
• follows a panel of PA counties that saw entrance of Wal-Marts in 2002
Findings:
1. New stores have no effect on existing employee wages in retail sector.
2. New retail sector hires (overall) experience a $0.50 per hour increase
in total compensation in the quarter Wal-Mart enters.
3. Entrance of Wal-Mart draws employees from existing businesses,
reducing their job creation and increasing flows.
4. Wal-Mart’s long term effect on net employment is an increase of
approximately 50 jobs in a year. This effect was also found in Hicks
and Wilburn (2001) and Basker (2005)
5. Wal-Mart entrance reduces retail job sector turnover by over 40%.
Wal-Mart’s Impact on Retail Trade Sector in West
Virginia – EMPIRICAL EVIDENCE
• by Hicks & Wilburn (2001)
• follows a panel of 55 WV counties that saw entrance of Wal-Marts and
tests impacts in both entering and adjacent counties
•Controls for endogeneity of entrance decision; applies spatial analysis
Findings:
1. Entrance of Wal-Mart results in a net increase in employment (55 jobs)
2. Entrance of Wal-Mart results in a mild increase in the number of firms
(five) in the Retail Trade sector (SIC 52).
Wal-Mart’s Impact on Local Fiscal Health in Ohio –
EMPIRICAL EVIDENCE
• by Michael Hicks
• follows a panel of OH counties between 1985 and 2003 that saw
entrance of Wal-Marts and tests for impacts on revenues and transfer
payments
•Controls for endogeneity of entrance decision; applies spatial analysis
Findings:
1. Presence of Wal-Mart increases local commercial property tax
assessments – resulting in collection increases between $350,000 and
$1.3 million.
2. Wal-Mart entry increases local labor force participation rates.
3. Presence of a Wal-Mart dramatically increases per capita earned
income tax credit claims – between 18% and 43%.
4. Negligible impact of Wal-Mart on Food stamps expenditures.
5. Wal-Mart has no impact on either TANF or earlier AFDC expenditures.
6. Each Wal-Mart entry increases Medicaid expenditures – equivalent to
an additional 16 cases per county.
The Effects of Wal-Mart on Local Labor Markets – A
National County Level Study – EMPIRICAL EVIDENCE
• by David Neumark, Junfu Zhang and Stephen Ciccarella
•Estimates effects of Wal-Mart on county level employment and earnings
•Controls for endogeneity of entrance decision; applies spatial analysis
•OLS and IV results dramatically different
Findings:
1. In retail sector, Wal-Mart stores reduce overall retail employment
between 2% and 4%.
2. Statistically non-robust finding that retail payrolls decline by 3.5%.
3. Statistically non-robust finding that Wal-Mart increases TOTAL
employment by 2%.
4. Statistically non-robust finding that TOTAL payrolls per person decline
by nearly 5%
The Economic Impact of Wal-Mart Supercenters on
Existing Businesses in Mississippi – EMPIRICAL EVIDENCE
• by Kenneth Stone, Georgeanne Artz and Albert Myles
•Estimates impact of Wal-Mart supercenters on sales of existing businesses
•Uses data from sales tax reports to analyze changes in sales of food stores,
general merchandise stores, furniture stores, building materials stores,
miscellaneous retail stores and total county sales
Findings:
1. Annual general merchandise sales increase dramatically - by 41% in
host counties and decreased slowly in non-host counties.
2. Existing food store sales declined between 10% and 20% over five year
period in host-counties. Non-host county grocery sales unaffected.
3. Furniture stores in host counties experience sales increases. Furniture
stores in non-host counties experience sales decreases.
4. Wal-Mart supercenters capture between 2% and 12% of
miscellaneous retail sales from host counties. Sales in non-host
counties unaffected.
5. Total sales in host counties increase by 3% to 5% per year. Non-host
counties lose a small amount of total sales.
Consumer Benefits from Increased Competition in
Shopping Outlets – EMPIRICAL EVIDENCE
• by Jerry Hausman and Ephraim Leibtag
•Estimates consumer benefits from entry into markets for food.
•Applies standard discrete choice utility model
•Uses household panel data to follow shopping patterns over time and
control for “fixed effect” of their shopping behavior.
Findings:
1. Substantial consumer benefits from the presence of supercenters.
•
Estimates direct effects - average overall food price differences between
supercenters and traditional stores for over 20 specific foods and finds that
supercenters lower prices between 5% and 48% for these items.
•
Estimates indirect effects – how increased competition results in lower prices at
existing outlets – and find that food prices fall by 0.75% per year as a result of
this competition.
•
Estimates direct impacts of consumer welfare using a “virtual price approach”
and finds that the compensating variation for food expenditures averages 25%
of average expenditures per month with the largest gains to poor and minority
households (30%) and smallest to wealthiest (20%) – these are enormous gains,
particularly since poor spend larger portions of their expenditures in
supercenters than non-poor.
Selling a Cheaper Mousetrap: Wal-Mart’s Effect on
Retail Prices – EMPIRICAL EVIDENCE
• by Emily Basker
•Estimates effects of Wal-Mart on average city-level prices for variety of
consumer goods using 20 year panel of data
Findings:
1. Wal-Mart entry results in average short-run price decreases of
between 1.5% and 3.0%
2. Wal-Mart entry results in average long-run price decreases of between
6.0% and 12.0% at the city level.
The Economic Impact of Wal-Mart – EMPIRICAL
EVIDENCE
• by Global Insight
•Estimates effects of Wal-Mart on overall U.S. economy and on Dallas-FW
economy
•Estimates impact of entry on county composition and levels of retail
employment
Findings:
1. Expansion of Wal-Mart between 1985-2004 led to a cumulative
decline in food prices of 9.2%and also a cumulative decline in goods
prices of 4.2% and a ceteris paribus decline in national CPI of 3.1%.
2. These price declines have led to a cumulative amount of consumer
savings of $263 billion.
3. Wal-Mart’s impact on the U.S. economy has been a net positive –
resulting in an increase in 210,000 net jobs over the period.
4. U.S. Total Factor Productivity increased by 0.75% more due to WalMart than it otherwise would have been.
5. Nominal wages are 2.2% lower in the U.S. – resulting in a net increase
in real disposable income of 0.9%.
The Economic Impact of Wal-Mart – EMPIRICAL
EVIDENCE, continued
• by Global Insight
Findings, continued:
1. Cumulative cost savings in Dallas-FW are 4.0%.
2. Wal-Mart has led to a net increase of 6,300 jobs in Dallas-FW.
3. Real disposable income has increased by 2.6% in Dallas-FW.
4. At the county level, short term retail employment increases by 137 jobs
after the entry of a 150-350 person store and long-term increases of 97.
5. At the county level, there are net job declines in in food stores and
apparel and accessory stores, but to net job increases in building
materials, garden supplies and general merchandise stores.