The Impact of e-commerce on Local Retail Employment: Examining Heterogeneous Impacts by Employment and Regional Types*

ABSTRACT

This paper examines the impact of e-commerce on local retail employment and its heterogeneity by employment and regional types, using Korean retail survey. Our findings reveal that the positive impact of online sales expansion is mainly confined to the growth of wage workers, though its elasticity with respect to online sales is much smaller than that of offline sales. When dividing the full sample by regional type, the positive employment effect of online sales on wage workers is significant only in non-metropolitan regions. In addition, the negative impact of online sales on non-wage workers is found only in metropolitan regions.

KEYWORDS:

• E-commerce
• online sales
• retail industry
• local employment
• regional heterogeneity

JEL CODE:

• J21
• L81
• R12

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 When using panel data, we can consider a fixed-effects model and a random-effects model for analysis. In this study, a Hausman test was conducted to test which of the two models is more appropriate before the empirical analysis. The results of the Hausman test show that the null hypothesis is rejected at the 5% significance level for all models (Model 1-8). Therefore, it is more appropriate to use the fixed effects model. All results are available upon request.

2 This includes sectors like Retail Sale of Beverages and Tobacco, Retail Sale of Musical Records and Videos, and 23 other sectors for online sales (952 region-sectors from 2010-2017), Retail Sale of Musical Records and Videos, Retail Sale of Games, Dolls and Toys for wage workers (33 region-sectors from 2011-2018), and Retail Sale in Non-Specialized Large Stores for non-wage workers (124 region-sectors from 2011-2018).

3 https://mdis.kostat.go.kr/index.do

4 There are 8 metropolitan cities (Seoul, Busan, Daegu, Incheon, Gwangju, Daejeon, Ulsan, Sejong) and 9 provinces at the provincial level in Korea. Sejong city, among them, is newly established in 2012 for the purpose of the central government’s administration. Its area and economic size show similarities to counties. Furthermore, it is much smaller in terms of geographic size than metropolitan cities. Considering its relative economic size and data availability only after 2012, seven metropolitan cities and nine provinces except for Sejong city were used in the present analysis.

5 The data that support the findings of this study are available from the Big Data Business Division of Shinhan Financial Group. Restrictions apply to the availability of these data, which were used under license for this study. Data are available from the authors with the permission of the Big Data Business Division of Shinhan Financial Group.

6 https://kosis.kr/index/index.do

7 Based on the estimation results in Table 4, a 1% decrease in the average offline sales leads to 0.254% decrease in the number of wage workers in non-metropolitan regions. To set off the loss of employment, the size of online sales in the regions need to grow 31.75%. Since the average level of online sales in non-metropolitan regions is relatively low, the fast growth of online sales in non-metropolitan regions would not be impossible. However, barriers such as limited human resources and infrastructures to foster e-commerce should be resolved first for tapping into the potential employment effect of e-commerce in non-metropolitan regions.

Additional information

Funding

This paper was supported by Konkuk University in 2023.