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Measuring the Economic Effects of Military Base Closures

  • Mark A. Hooker
  • Michael M. Knetter
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    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.

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    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 6941.

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    Date of creation: Feb 1999
    Date of revision:
    Publication status: published as With Mariko Sakakibara of the Anderson Graduate School of Management, Journal of Industrial Economics, Vol. XLVI, no.2 (June 1998).
    Handle: RePEc:nbr:nberwo:6941
    Note: PE
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    1. C J Krizan, 1998. "Localized Effects Of CaliforniaS Military Base Realignments: Evidence From Multi-Sector Longitudinal Microdata," Working Papers 98-19, Center for Economic Studies, U.S. Census Bureau.
    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, June.
    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. 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.
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