Sunday, August 27, 2006

Grocery Stores in the Inner City

Tim Noah's most recent Slate Column--http://www.slate.com/id/2148038/?nav=fix--is really good. But while he is surely correct that the entrepeneurial Jews, Koreans and Arabs who have run inner city bodegas are hardly exploiters getting rich off of ill-gotten booty, many poor Americans to not have access to supermarkets. Consequently, the poor pay more money for lower quality goods than their more affluent fellow-citizens. There can be no question that this is yet another unfair outcome for those Americans who already face many unfair outcomes.

But does Wal-mart make things better? I am with Noah that the jury is still out on this. Emek Basker at the University of Missouri is doing some great work on Wal-mart (http://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=93768), but does not answer for me the question as to whether the prices it provides low income people makes up in a social welfare sense for the low wages it pays low income people. I do know that I have not seen convincing evidence that Wal-mart enjoys the sort of monopsony position in the labor market that would allow it to pay workers something less than their marginal product.

That said, Whole Foods, expensive as it is, may well provide low-income people with better food at lower prices than bodegas. Whole Foods usually shows up on lists of good places to work. The choice is therefore not necessarily between mom and pops and Wal-mart.

1 comment:

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