Does Mr Anderson have a jobafter the military has left? -An investigation on unemployment rate in Swedish muncipalities aftected by a military base closure.

Abstract: The purpose of this study is to investigate if a military base closure has any effects on unemployment in the affected municipality. In this study military base has been viewed as a cluster for the municipality where resources, infrastructure and employment in the municipality are drawn to maintain the base. When a shutdown happens they are viewed as a negative exogenous shock for the municipality in labor demand. The method chosen this study was a regression analysis based on panel data between the years 1996 to 2011. The sample covers municipalities which had or has a military development in Sweden during the period. The model which was used was based on region growth with factors of scale and agglomeration economics, also factors that effects unemployment such as income and human capital. To check if a shutdown had any effect on the unemployment rate a dummy variable was used which turned 1 at the year the closure happened and was 1 for the rest for the period when the base was closed. The overall main results indicate that a shutdown has a negative effect on unemployment rate in the affected municipality but it is on a low economic significance. Also, the results suffer from autocorrelation which makes the result not so valid along with problem of data. For further research it is suggested to investigate with micro data or the more reasonable do a case study on one municipality or several to investigate the effects of political decision after a closure.