The Impact of Amazon Facilities on Local Economies

Abstract

A number of large companies deploy facilities—factories, warehouses, shopping malls—that employ thousands of people directly and indirectly. Local governments have been enticing these companies with various financial incentives. But how much economic growth do these facilities promote, if any? We study this question using Amazon distribution facilities as the case in point. We show evidence of a positive effect of opening Amazon's distribution facilities on counties' economic outcomes. We focus on midsized counties in which Amazon opened facilities in the years 2014–2017 because we have good controls for these counties. We find a selection effect where Amazon locates its facilities, and we address this issue. Our preferred methodology is Callaway–Sant'Anna difference-in-differences combined with matching. After Amazon's entry, in our preferred specification, we find that the employment-to-population ratio in the treated county increased by 0.0087 (+1.46% at the mean), the poverty rate decreased by 0.36 percentage points (−2.69%), and the median household income increased by $1413 (+2.33%). We present evidence to argue that our findings can likely be interpreted as causal and plausible.