Wal-Mart and Small Business: Boon or Bane?

This paper tests the impact of Wal-Mart discount and superstore presence on the number of small businesses in Iowa counties from 1989-2003. I employ and compare two well-known identification strategies in a spatial autoregressive model. I find no statistically meaningful impact of Wal-Mart on small firms (1-20 employees in three employment ranges), though there is weak statistical evidence that an own-county Wal-Mart increases the number of small businesses while Wal-Marts in adjacent counties reduce the number of small businesses. These results mimic several other studies of Wal-Mart including Hicks and Wilburn (2001), Hicks (2007), and Sobel and Dean (2008).