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Wal-Mart and Poverty

This study finds that the presence of Wal-Mart stores made it more difficult for communities to reduce their poverty rates during the booming 1990s decade.  The presence of the chain is associated with higher poverty rates, even after a host of factors that cause poverty are held constant.  The study controls for (or removes the influence of) the possibility that Wal-Mart might choose to locate its stores in higher-poverty counties.  In fact, the study also finds that the chain avoids counties with more poverty, all else equal. 

The higher poverty rate is a so-called “externality” that the chain creates for local communities.  Externalities are costs created by one entity that are paid or borne by others.  One conclusion of this work is that the chain is not the engine of economic growth that some believe it to be, and that communities need to consider very carefully whether or not to provide infrastructure or other development subsidies to the chain.

Popular books that cite this study:

  • Fishman, Charles (2006) The Wal-Mart Effect. The Penguin Press, New York.
  • Mitchell, Stacy (2006) Big-Box Swindle, Beacon Press, Boston.

To find weblogs and newspaper articles discussing this study, enter the following search terms into Google [news]: Goetz Wal-Mart Poverty

To cite this article:

Goetz, Stephan J. & Swaminathan, Hema (2006), “Wal-Mart and County-Wide Poverty,” Social Science Quarterly 87 (2), 211-226.