Monopsony Power and Poverty: The Consequences of Walmart Supercenter Openings

Lukas Lehner, Zachary Parolin (), Clemente Pignatti and Rafael Pintro Schmitt
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Zachary Parolin: Bocconi University
Rafael Pintro Schmitt: University of California, Berkeley

No 17323, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Prior research suggests that Walmart Supercenters exert substantial power over the low-wage labor market, though the consequences of Supercenter openings on household incomes and public finances are less clear. This study uses restricted-access Panel Study of Income Dynamics data from 1970 to 2019 to study how Walmart Supercenter openings affect poverty, tax liabilities, and receipt of income transfers. 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.

Keywords: poverty; monopsony power; Walmart; local labor markets; economic inequality (search for similar items in EconPapers)
JEL-codes: J23 J31 J42 R23 (search for similar items in EconPapers)
Pages: 71 pages
Date: 2024-09
New Economics Papers: this item is included in nep-ind and nep-lma
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