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Does Wal-Mart Cause an Increase in Anti-Poverty Program Expenditures?

Michael Hicks ()

Public Economics from EconWPA

Abstract: As the largest private sector employer in the United States, Wal-Mart experiences considerable scrutiny over its influence on a number of regional fiscal and economic issues. These include its impact on the local retail market structure, land use patterns, local fiscal conditions and general business practices. Criticism of Wal-Mart’s business practices include, but are not limited to its anti-unionization efforts, sale of imported goods, wage and compensation structure and the use of Federal and state anti-poverty transfers by its employees. In this paper I evaluate the concerns regarding the role of Wal-Mart in changing expenditures on Federal and state anti-poverty transfers in the United States. Using a panel of the conterminous 48 states, correcting for time and spatial autocorrelation and local government mix and policy changes, I find the number of Wal-Marts, and their employment share in the retail sector have no impact on Foodstamps expenditures. Expenditures on AFDC/TANF are unaffected by Wal-Mart in the test using the number of stores to represent Wal-Mart’s presence. In the retail employment share, the impact is negative, with a 1 percent increase in Wal-Mart’s share reduced AFDC/TANF expenditures by 3.3 percent. I find that Wal-Mart does increase Medicaid expenditures by roughly $898 per worker, which is consistent with other studies of the Medicaid costs per low wage worker across the United States.

JEL-codes: D6 D7 H (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-pbe
Date: 2005-11-21
Note: Type of Document - pdf
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