Walmart Supercenters and Monopsony Power: How a Large, Low-Wage Employer Impacts Local Labor Markets

Grant description:

This project seeks to determine the overall impact of Walmart supercenters on local employment and earnings, and more generally on the competitive structure of affected local labor markets. The research design exploits the fact that Walmart Inc. attempted to place a supercenter in 39 counties but was prevented from doing so as the result of local efforts. These counties are compared to those where a supercenter was opened. Data on employment and earnings is gathered from the Quarterly Census of Employment and Wages, and county-by-year labor force data from the Local Area Unemployment Statistics, both from the U.S. Bureau of Labor Statistics. Preliminary results show that the entry of Walmart supercenters caused significant reductions in aggregate local employment and earnings, with retail employment increasing immediately upon entry before largely reverting to pre-entry levels. This research will help us understand how large employers can exercise monopsony power locally in the market for less-skilled labor and what the consequences are for workers.