Scandinavian Working Papers in Economics

HUI Working Papers,
HUI Research

No 100: What Happens When IKEA Comes to Town?

Sven-Olov Daunfeldt (), Oana Mihaescu , Helena Nilsson and Niklas Rudholm
Additional contact information
Sven-Olov Daunfeldt: HUI Research, Postal: SE-10329 Stockholm, Sweden, Dalarna University, SE-79188 Falun, Sweden
Oana Mihaescu: HUI Research, Postal: SE-10329 Stockholm, Sweden, Dalarna University, SE-79188 Falun, Sweden
Helena Nilsson: HUI Research, Postal: SE-10329 Stockholm, Sweden, Dalarna University, SE-79188 Falun, Sweden
Niklas Rudholm: HUI Research, Postal: SE-10329 Stockholm, Sweden, Dalarna University, SE-79188 Falun, Sweden

Abstract: Using data from 2000-2011, the effects of a new IKEA store on retail revenues, employment, and inflow of purchasing power in the entry municipalities, as well as in neighboring municipalities were investigated. A propensity score matching method was used to find non IKEA entry municipalities that were as similar as possible to the entry municipalities based on the situation before entry. Our results indicate that IKEA-entry increased entry-municipality durable-goods revenues by about 20% and employment by about 17%. Only small and, in most cases, statistically insignificant effects were found in neighboring municipalities.

Keywords: big-box retailing; retail revenues; job creation; employment; propensity-score matching; panel data

JEL-codes: D22; L11; L25; L26

27 pages, March 5, 2014

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