Defence spending and unemployment rates: an empirical analysis disaggregated by race

Abstract

This analysis brings U.S. time series evidence to bear on the relationship of defense spending and unemployment rates. Results indicate that defense increases during the 1970s were associated with improvements in the overall unemployment rate. However, during the 1980s such increases were associated with a worsening of the unemployment rate. Furthermore, upon disaggregation into black and white unemployment rates, it was found that, in general, whites were helped by defense spending increases while blacks were hurt. This evidence offers support for the claim that an increasing complex military production process will lead to diminished employment gains, particularly for minorities who are not proportionately represented in the high-tech industries that serve the military. Copyright 1990 by Oxford University Press.