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The Local Economic Impacts of Military Personnel

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  • Ben Zou

Abstract

I evaluate the local economic impacts of contractions in US military personnel between 1988 and 2000. I propose a novel empirical strategy combining the synthetic control and instrumental variables methods and estimate the causal effects on the equilibrium quantities and prices of local labor, housing, and product markets. Contractions in military personnel substantially reduced local civilian employment; however, local populations adjusted quickly, mainly through reduced in-migration, resulting in small changes in wages and large declines in rental prices. Relating these empirical findings to a simple spatial equilibrium model, I show that the welfare cost for workers is small.

Suggested Citation

  • Ben Zou, 2018. "The Local Economic Impacts of Military Personnel," Journal of Labor Economics, University of Chicago Press, vol. 36(3), pages 589-621.
    • Handle: RePEc:ucp:jlabec:doi:10.1086/696141
    DOI: 10.1086/696141
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    Cited by:

    1. Bruno Ferman & Cristine Pinto & Vitor Possebom, 2020. "Cherry Picking with Synthetic Controls," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 39(2), pages 510-532, March.
    2. Suin Lee & Christos Pantzalis & Jung Chul Park, 2024. "Interstate migration‐based social networks and M&A decisions," The Financial Review, Eastern Finance Association, vol. 59(1), pages 113-153, February.
    3. Philipp vom Berge & Achim Schmillen, 2023. "Effects of mass layoffs on local employment—evidence from geo-referenced data," Journal of International Economic Law, Oxford University Press, vol. 23(3), pages 509-539.
    4. Räsänen, Johannes & Mäkelä, Erik, 2021. "The effect of government spending on local economies during an economic downturn," European Economic Review, Elsevier, vol. 134(C).
    5. Rickman, Dan S. & Wang, Hongbo, 2022. "Estimating the Economic Effects of US State and Local Fiscal Policy: A Synthetic Control Method Matched Regression Approach," MPRA Paper 112575, University Library of Munich, Germany.
    6. Yu, Lamont Bo & Tran, Trang My & Lee, Wang-Sheng, 2023. "Bridging the gap: Assessing the effects of railway infrastructure investments in Northwest China," China Economic Review, Elsevier, vol. 82(C).
    7. Rodríguez-Puello, Gabriel, 2024. "Digging for Trouble? Uncovering the Link Between Mining Booms and Crime," OSF Preprints s8ayp, Center for Open Science.
    8. Dan S. Rickman & Hongbo Wang, 2024. "Estimating the economic effects of US state and local fiscal policy: A synthetic control method matching‐regression approach," Growth and Change, Wiley Blackwell, vol. 55(2), June.
    9. Philipp vom Berge & Achim Schmillen, 2023. "Effects of mass layoffs on local employment—evidence from geo-referenced data," Journal of Economic Geography, Oxford University Press, vol. 23(3), pages 509-539.
    10. Timothy M. Komarek, 2020. "State‐level austerity, education, and large urban labor markets: Evidence from fiscal policy experiments in Kansas and Wisconsin," Growth and Change, Wiley Blackwell, vol. 51(2), pages 556-583, June.

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