Cover: The Effect of Reserve Activations and Active-Duty Deployments on Local Employment During the Global War on Terrorism

The Effect of Reserve Activations and Active-Duty Deployments on Local Employment During the Global War on Terrorism

Published Jan 25, 2006

by David S. Loughran, Jacob Alex Klerman, Bogdan Savych

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Today, American service personnel are deploying at rates not seen since the Vietnam War. Such deployments and activations have raised concerns about their effect on the local economies-due to the temporary loss of employees in the workforce-but little analysis has been done on the issue. To address this gap in understanding, the authors of this report use econometric models to analyze the impact of activations and deployments on economic conditions, as measured by changes in employment at the county level. The authors conclude that long-term impacts on local economic conditions, in aggregate, will not be significant. For reserve activations, the authors’ estimates imply a nearly one-for-one decline in employment with activation in the short run, but by four months following a given activation, employment returns to its pre-activation level. For active-duty deployments, their estimates imply an increase of about one civilian employee for every ten deploying active-duty service members. The authors suggest that future research might focus on the impact of activations on smaller firms and the self-employed, neither of which could be examined specifically with the data used in this report.

The research descibed in this report results from the RAND Corporation’s continuing program of self-initiated independent research. Support for such research is provided, in part, by donors and by the independent research and development provisions of RAND’s contracts for the operation of its U.S. Department of Defense federally funded research and development centers.

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