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.
Highlights
The putative economic impact of a discount store in a community has been hotly debated in communities across the U.S throughout the past decade
We examine whether the entrance of Wal-Mart in poor counties, with fewer retail outlets, results in stronger economic impacts than in more populous and affluent counties
While we have specific analytical methods to determine whether Wal-Mart entered faster-growing counties within the region, it is clear that West Virginia would have ranked near the bottom on any growth-related entrance decision
Summary
The putative economic impact of a discount store in a community has been hotly debated in communities across the U.S throughout the past decade. Among the perceived impacts of these types of discounts stores, which we feel competent to address, include lower regional wages, capital outflows, and loss of independent, locally owned businesses These costs are weighed against arguments relating to the benefits of increased efficiency, employment, and tax revenues. Most work in this area has focused on the location of Wal-Mart stores in local communities since the mid-1980s These researchers found no evidence of a net negative impact of Wal-Mart location, instead finding increases in broad measures of income, retail employment and income, and sales tax revenues. We enjoy the benefit of his extensive contribution to this area
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