Defense spending as a mechanism for reducing U.S. unemployment
Silverberg, Kristen Elisabeth.
Thesis (M.P.P.)--Georgetown University, 2010.; Includes bibliographical references.; Text (Electronic thesis) in PDF format. This study examined the relationship between United States (U.S.) defense spending and the national unemployment rate, hypothesizing that increases in U.S. defense spending lead to decreases in the national unemployment rate through an increase in the number of government and private sector jobs. To accomplish this, three separate models were studied using data from 1948-2008, each regressing defense spending as the primary variable of interest with non-defense spending, gross domestic product (GDP), and involvement in war on the dependent variables of national unemployment rate, number of private sector jobs, and number of public sector jobs.; Results show a statistically significant relationship between current year defense spending and one-year lagged non-defense spending on the dependent variables of unemployment rate and private sector jobs. However, the direction of the relationship between these variables contradicts the hypothesis, as increases in either variable are associated with higher rates of unemployment and fewer private sector jobs. Conversely, increases in GDP are found to decrease the unemployment rate and increase the number of private sector jobs at a highly statistically significant level (p < 0.000). Periods of war are associated with a decrease in the unemployment rate (p < 0.002); however, there is no statistically significant relationship with the number of government or private sector jobs. In fact, no variable is shown to significantly affect the number of government jobs. These results suggest that a tie between spending and employment exists; however, additional scrutiny of the data and its limitations is required to fully define the policy implications.
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