The Effect of Military Base Closures on Rural County Economies: An Evaluation of the 1988–1995 Rounds of Cuts

Abstract

Recent announcements of a recommended downsizing of the U.S. Armed Forces, likely to include proposed base closures, will bring new focus to the effect of previous base realignments and closures (BRACs) on the economies of counties hosting military bases. This research provides a new analysis of the effects of base closures on counties which lost military bases or had significant losses due to realignment in the 1988 through 1995 rounds of military base restructuring. This study examines six counties which satisfied the criteria of experiencing a major loss of jobs and being located in non-metropolitan areas. The study employs a quasi-experimental methodology in which counter-factual control groups were selected to evaluate the effects of the base closures. Mahalanobis distance is used to select the control groups, with a priori elimination of urban counties and counties that experienced similar economic shocks or were in proximity to the BRAC event. Factors used in the procedure included several sectoral earnings percentages and income characteristics, growth rates in population and income, nearness to urban areas, population potential, and coefficient of specialization. Impact assessment uses the median growth rate among the control counties to calculate the expected employment by sector and year for the treated county. The expected value is then compared to the actual employment to assess the impact by sector of the military base job loss. Statistical significance is assessed by the rank among the controls and the treated county growth rate.