From STACY MITCHELL
New Rules Project
The results of a new study suggest that the key to reversing the long-term trend of stagnating incomes in the U.S. lies in nurturing small, locally owned businesses and limiting further expansion and market consolidation by large corporations.
Economists Stephan Goetz and David Fleming, both affiliated with Pennsylvania State University and the Northeast Regional Center for Rural Development, conducted the study, “Does Local Firm Ownership Matter?” It was published in the journal Economic Development Quarterly.
Goetz and Fleming analyzed 2,953 counties, including both rural and urban places, and found that those with a larger density of small, locally owned businesses experienced greater per capita income growth between 2000 and 2007. The presence of large, non-local businesses, meanwhile, had a negative effect on incomes.
“Even after we control for other economic growth determinants … the non-resident-owned medium and large firms consistently and statistically depress economic growth rates … The other major result is that resident-owned small firms have a statistically significant and relatively large positive effect” on income growth, the authors report. Small firms are defined as