Working Paper: NBER ID: w30077
Authors: Sudheer Chava; Alexander Oettl; Manpreet Singh; Linghang Zeng
Abstract: Using an administrative payroll dataset for 2.6 million retail workers, we find that the staggered rollout of a major e-commerce firm's fulfillment centers reduces traditional retail workers' income in geographically proximate counties by 2.4%. Wages of hourly workers, especially part-time hourly workers, decrease significantly, driven by a drop in the number of hours worked. We observe a U-shaped pattern in which both young and old workers experience a sharper decrease in wage income. Consequently, some workers experience an increase in credit card delinquency. Using data for 3.2 million stores, we find that sales (employment) at proximate stores decrease by 4% (2.1%). Exits, especially of young and small stores, increase, and entry decreases. In aggregate, the retail sector loses 938 jobs per county per quarter, and the transportation-warehousing sector (food services sector) gains 256 (143) jobs. Our results highlight how creative destruction led by e-commerce impacts local labor markets.
Keywords: e-commerce; retail sector; creative destruction; employment; income
JEL Codes: J30; L81; O33
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Staggered rollout of fulfillment centers (FCs) (D25) | Significant reduction in labor income for retail workers in proximate counties (F66) |
| Staggered rollout of fulfillment centers (FCs) (D25) | 25% decrease in labor income for hourly workers (J31) |
| Staggered rollout of fulfillment centers (FCs) (D25) | Increase in credit card delinquency among financially vulnerable workers (G51) |
| Staggered rollout of fulfillment centers (FCs) (D25) | 4% decrease in sales at retail establishments (L81) |
| Staggered rollout of fulfillment centers (FCs) (D25) | 21% reduction in employment at retail establishments (L81) |
| Staggered rollout of fulfillment centers (FCs) (D25) | Loss of 938 jobs per county per quarter in the retail sector (J63) |
| Staggered rollout of fulfillment centers (FCs) (D25) | Gain of jobs in transportation and warehousing sectors (L91) |