You set up a study aimed at discovering whether Walmart’s are good for local economies based...

You set up a study aimed at discovering whether Walmart’s are good for local economies based on the following hypothesis:

Null Hypothesis: New Wal-Mart stores negatively impact wages and prices in communities

Alternative Hypothesis: New Wal-Mart stores do not negatively impact wages and prices in communities

The independent variable in this case is the number of Walmart stores in an area and the dependent variable in first case will be wages and in the second case it will be prices.

***What kinds of economic methods and techniques would you use? What data types would you use to set up this study? Any help is much appreciated!

Expert Solution

In the first case, to find out the impact of the number of Walmart stores on wages, we need two data sets. The first data set of the independent variable of number of Walmart stores in a local area of the United States can be obtained from the Walmart website. For robust results, it is advisable to take data of 10 years. Thus, time series data set for past 10 years will be obtained. The data of the wages in the area can be obtained from Bureau of Labor Statistics. Thus, after collecting the data set, normalization of data set should be done because both are measured in different units and then Ordinary least Squares (OLS) regression can be run to evaluate the impact of number of Walmart local stores on the wage rate in the area. Similarly, the data set related to prices in the communities can also be obtained from the same site and same steps will be followed as in the first case mentioned above.

Rahul Sunny answered 1 year ago

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