This paper explores the widely accepted view that Wal-Mart causes significant harm
to the traditional, small ''mom and pop'' business sector of the U.S. economy. We
present the first rigorous econometric investigation of this issue by examining the
rate of self-employment and the number of small employer establishments using
both time series and cross-sectional data. We also examine alternative measures
and empirical techniques for robustness. Contrary to popular belief, our results
suggest that the process of creative destruction unleashed by Wal-Mart has had no
statistically significant long-run impact on the overall size and profitability of the
small business sector in the United States.