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Measuring the Economic Effects of Military Base Closures

Author

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  • Mark A. Hooker
  • Michael M. Knetter

Abstract

Quite often, policy changes that are seen as welfare-improving at the national level encounter significant resistance in localities where the policies are implemented. Defense spending cuts and international trade agreements are classic examples. However, there is little systematic evidence on the magnitude of economic costs that fall on adversely affected communities. In this paper, we use a newly constructed dataset to analyze the county-level employment and personal income effects resulting from closures of military bases during 1971 - 1994. Our estimated multipliers are mostly less than one, and considerably smaller than those typically used in economic impact studies. We find that the employment costs are mostly limited to the direct job loss associated with military transfers out of the region, and per-capita income is little affected by closures on average.

Suggested Citation

  • Mark A. Hooker & Michael M. Knetter, 1999. "Measuring the Economic Effects of Military Base Closures," NBER Working Papers 6941, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:6941
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    References listed on IDEAS

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    1. Olivier Jean Blanchard & Lawrence F. Katz, 1992. "Regional Evolutions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(1), pages 1-76.
    2. Steven J. Davis & John C. Haltiwanger & Scott Schuh, 1998. "Job Creation and Destruction," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262540932, April.
    3. Charlotte Twight, 1989. "Institutional Underpinnings of Parochialism: The Case of Military Base Closures," Cato Journal, Cato Journal, Cato Institute, vol. 9(1), pages 73-105, Spring/Su.
    4. C J Krizan, 1998. "Localized Effects Of California'S Military Base Realignments: Evidence From Multi-Sector Longitudinal Microdata," Working Papers 98-19, Center for Economic Studies, U.S. Census Bureau.
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    Cited by:

    1. Andy Hultquist & Tricia L. Petras, 2012. "An Examination of the Local Economic Impacts of Military Base Closures," Economic Development Quarterly, , vol. 26(2), pages 151-161, May.
    2. Marc Doussard, 2014. "Reevaluating the Pursuit of Defense Investment," Economic Development Quarterly, , vol. 28(4), pages 339-350, November.

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    More about this item

    JEL classification:

    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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