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.
updated Jul 18, 2008
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