WalMart Effect
2025-01-01 00:50:32.988417+01 by Dan Lyke 0 comments
The Atlantic: The Walmart Effect (hopefully with gift link attached)
New research suggests that the company makes the communities it operates in poorer—even taking into account its famous low prices.
Using a stacked difference-in- differences approach, we find that the opening of a Supercenter leads to a 2 percentage point (16%) increase in poverty. This increase is channeled through declining annual earnings and persists for 10 years following the Supercenter’s entry. Increases in poverty are particularly strong for younger and less-educated adults, and for adults with pre-treatment incomes below the national median. Moreover, Walmart Supercenter openings lead to a $200 (or 16%) per household per year increase in government income transfers received, and a $920 (or 5%) per household per year decrease in tax revenues.
I first show Supercenter entry sharply increased labor market concentration. Supercenters were able to hire large numbers of retail workers with zero increase in average earnings, in- dicating Walmart had wage-setting power. I then show Supercenter entry caused large declines in overall local employment and earnings, particularly among local goods-producers, indicating Walmart displaced manufacturing demand away from local producers and to its own national and international suppliers. In counties with a Supercenter, subsequent exogenous minimum wage increases led to significant growth in aggregate and retail employment. These results run counter to predictions for competitive labor mar- kets, and indicate Walmart Supercenters gradually accumulated and exercised monopsony power, with negative consequences for workers.