Working Paper: NBER ID: w20313
Authors: Brianna Cardiff-Hicks; Francine Lafontaine; Kathryn Shaw
Abstract: With malls, franchise strips and big-box retailers increasingly dotting the landscape, there is concern that middle-class jobs in manufacturing in the U.S. are being replaced by minimum wage jobs in retail. Retail jobs have spread, while manufacturing jobs have shrunk in number. In this paper, we characterize the wages that have accompanied the growth in retail. We show that wage rates in the retail sector rise markedly with firm size and with establishment size. These increases are halved when we control for worker fixed effects, suggesting that there is sorting of better workers into larger firms. Also, higher ability workers get promoted to the position of manager, which is associated with higher pay. We conclude that the growth in modern retail, characterized by larger chains of larger establishments with more levels of hierarchy, is raising wage rates relative to traditional mom-and-pop retail stores.
Keywords: retail wages; firm size; establishment size; managerial positions
JEL Codes: J00; J24; J31; L25; L81
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| firm size (L25) | wage levels (J31) |
| establishment size (L25) | wage levels (J31) |
| growth of modern retail (L81) | wage levels (J31) |
| worker sorting into larger firms (L26) | wage increases (J38) |
| managerial promotions (M51) | wage levels (J31) |