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Wal-Mart Effect

August 1, 2006

Do Wal-Marts help the economy, or hurt it? The debate continues with this new research.


Is Wal-Mart really a bargain? I’m Bob Hirshon and this is Science Update.

Wal-Mart’s low prices may come with a hidden cost, according to a study in Social Science Quarterly. Looking across the 1990’s, Penn State University economist Stephan Goetz and his colleagues compared poverty rates in US counties with new or existing Wal-Mart stores, to similar counties with no Wal-Mart. During this period, the national poverty rate fell.

STEPHAN GOETZ (Penn State University):
What we found was that in communities with Wal-Mart stores, the drop was smaller. So in that sense, the presence of a Wal-Mart store impeded success on the poverty front.

It had a similar effect on per capita food stamp use. The study can’t prove that Wal-Mart caused these effects, but it adds to the debate over whether Wal-Marts are good for local communities. I’m Bob Hirshon for AAAS, the Science Society.