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Base Closure Impacts and the General Effects of Military Installations on Local Private Employment
AIR FORCE INST OF TECH WRIGHT-PATTERSONAFB OH
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This study explores general effects of military installations on local employment, and the special case of Base Realignment and Closure BRAC. A partial adjustment construct is used. Both random and fixed effects specifications of the disturbance term are evaluated. The analysis also includes levels and changes forms of the model. Defense personnel changes are decomposed into positive, negative, and BRAC related components, then examined for asymmetrical effects attributable to the public goods and community infrastructure vacuum brought about through installation downsizing. Economic assistance, and facilities reutilization in BRAC communities are also considered, as are the elasticities of defense employment multipliers with respect to industry specialization and military vs. civilian workforce composition. Instrumental variable techniques are employed. A novel panel data set incorporating 21 years of county level data allows comprehensive examination of defense related employment trends across all 50 states. The collection of sub-county defense personnel figures addresses a shortcoming of other county-level impact studies, which reconcile community employment changes against base closure personnel losses, without consideration of personnel dynamics at other military installations within the same county. There is evidence of asymmetrical relationships between military personnel level changes, and local community employment. While this supports the proposition of favorable effects through reutilization of public and community infrastructure, economic assistance and the practice of outsourcing defense support functions are also identified as contributors to this condition. Results also suggest regional industry specialization and workforce composition have little influence on the effect of local defense employment changes.
APPROVED FOR PUBLIC RELEASE