Wal-Mart: No Effect On Small Businesses Activity

Myth: Mega discount store Wal-Mart is a plague set upon small “mom-and-pop” businesses. The instant Wal-Mart moves into town, all small businesses are destroyed in its path, leaving downtowns barren and empty. According to Robert Reich, Wal-Mart turns “main streets into ghost towns by sucking business away from small retailers.”

Reality: The popular belief that Wal-Mart has a significant negative effect on the size of the mom-and-pop business sector of the United States economy is statistically unfounded. After examining a plethora of different measures of small business activity and growth, examining both time series and cross-section data, and employing different geographic levels of data and different econometric techniques, it can be firmly concluded that Wal-Mart has had no significant impact on the overall size and growth of U.S. small business activity.

Source: Cato Institute study “Has Wal-Mart Buried Mom and Pop?”

MP: In the chart above, the slope of the regression line is actually positive and significantly different from zero, which suggests that states with more Wal-Mart stores actually have significantly higher levels of five-to-nine-employee establishments.

Posted in Categories: Contributor, Economy, External Research, USA.

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Comment by Alan DeGracia

2008-07-20 15:36:41

I do not know who more out of touch, you or the authors. To actually put forth data that ended in 2000 as representative of current small retail-Walmart scenario adds no value in support of this position.

Grace Cheng musy really be hard up for contributors.

What will be your next Walmart post?

How about doing an up to date article on the results of the latest employee law suit and what a great employer Walmart is.

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