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Do large retailers affect employment? Evidence from an emerging economy

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  • Rosario Rivero
  • Rodrigo Vergara

Abstract

This article studies the effect of the emergence of large retailers (hypermarkets and department stores) on employment in the commerce sector in the regions of Chile. We use a panel with quarterly data from 11 Chilean regions for the period 1996 to 2004. Our results indicate that the entry of large retailers produces a discrete increase in employment in the commerce sector in the quarter that the entry occurs. We also find that there is an additional positive effect on employment throughout the year entry occurs, suggesting that suppliers or other parts of the chain of production follow the large retailer into the local market. However, after the first year of the entry there is a partial reversion, suggesting that smaller retailers exit or contract in response to the entry of the large retailer. The net effect on employment of the entry of a large retailer is an increase of 300 jobs.

Suggested Citation

  • Rosario Rivero & Rodrigo Vergara, 2007. "Do large retailers affect employment? Evidence from an emerging economy," Applied Economics Letters, Taylor & Francis Journals, vol. 15(1), pages 65-68.
    • Handle: RePEc:taf:apeclt:v:15:y:2007:i:1:p:65-68
    DOI: 10.1080/13504850600689998
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    1. Loreto Lira & Rosario Rivero & Rodrigo Vergara, 2005. "Entry and Prices: Evidence from the Chilean Supermarket Industry," Documentos de Trabajo 299, Instituto de Economia. Pontificia Universidad Católica de Chile..
    2. Emek Basker, 2005. "Job Creation or Destruction? Labor Market Effects of Wal-Mart Expansion," The Review of Economics and Statistics, MIT Press, vol. 87(1), pages 174-183, February.
    3. Basker, Emek, 2005. "Selling a cheaper mousetrap: Wal-Mart's effect on retail prices," Journal of Urban Economics, Elsevier, vol. 58(2), pages 203-229, September.
    4. C.J. Krizan & John Haltiwanger & Lucia Foster, 2002. "The Link Between Aggregate and Micro Productivity Growth: Evidence from Retail Trade," Working Papers 02-18, Center for Economic Studies, U.S. Census Bureau.
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    1. Loreto Lira & Rosario Rivero & Rodrigo Vergara, 2007. "Entry and Prices: Evidence from the Supermarket Sector," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 31(4), pages 237-260, December.
    2. Fernando Borraz & Juan Dubra & Daniel Ferrés & Leandro Zipitría, 2009. "Supermarket Entry and its effect on small stores in Montevideo, 1998 to 2007," Documentos de trabajo 2009005, Banco Central del Uruguay.
    3. Zipitría, Leandro, 2011. "Impacto económico del Supermercadismo [The Economics of Supermarkets: A Brief Literature Review]," MPRA Paper 28419, University Library of Munich, Germany.

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    More about this item

    JEL classification:

    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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