US bases and the local economy

The first finding concerns the labour market. In the municipalities affected by the withdrawal, full-time employment fell by 7.1 per cent. But the most interesting figure is another: the majority of job losses do not affect the bases’ direct employees. According to the authors, in fact, 61 per cent of the jobs lost stem from indirect effects on the local economy.

In other words, the problem is not merely that the base is making civilian staff redundant. It is that a significant proportion of local demand suddenly disappears. The soldiers and their families leave and, naturally, stop spending locally. The bases stop buying from local suppliers. Businesses that used to work with the army see their turnover plummet. At that point, redundancies begin in retail, services and related sectors.

It is a mechanism similar to that observed when a major manufacturing firm closes down in a town: the damage is not limited to direct employees, but spreads to suppliers, retailers and service providers. The authors estimate that every American soldier who is withdrawn results in the loss of around 0.53 local jobs.

The downturn in economic activity is also affecting local authorities, putting their budgets under strain. In the municipalities affected by the withdrawal, municipal revenue has fallen by around 9 per cent. Local authorities are responding by cutting public spending or raising local taxes.

The effects persist even ten years after the withdrawal, both in terms of employment and revenue from economic activities. This suggests that military withdrawal does not simply lead to a temporary recession, but brings about a structural change to the local economy. Smaller, rural or economically fragile areas are particularly vulnerable.

A comparison of the career trajectories of workers directly affected by base closures with those of similar workers who were not affected reveals an immediate drop in the probability of employment of around 50 percentage points. Many subsequently find new employment, but often in other regions and under worse conditions. Fifteen years later, they are still 20 percentage points less likely to be in employment and their daily wages are around 9 per cent lower. Women, older workers and those living in economically disadvantaged areas suffer the worst consequences. The withdrawal of troops, therefore, takes a heavy human toll.

And what about Italy? Our country is home to some of the most important US military installations in Europe: the air bases at Aviano and Sigonella, the naval base in Naples, the bases in Vicenza, Camp Darby between Pisa and Livorno, and other smaller facilities. In some areas, the US presence is a significant part of the local economy. Of course, the situation in Italia is not identical to that in Germany in the 1990s. However, the German precedent suggests that it would be a mistake to underestimate the local economic effects.

If Washington were indeed to reduce its military presence in Europe in the coming years, national governments and local authorities would need to prepare themselves not only strategically, but also economically and socially: repurposing military sites, attracting new investment, and implementing employment policies – particularly in areas that lack immediate alternatives. Research shows that the impact is particularly severe precisely where the labour market is least dynamic.

The lesson from Germany is clear: when American soldiers leave, it is not just a military presence that goes. A part of the local economy goes with it.

Bibliography

Kochems, J., & Schmidhäuser, J. (2026). Foreign Troops, Local Economies: The Economic Effects of US Withdrawals from Germany. ECONtribute DP No. 413 https://www.zew.de/publikationen/foreign-troops-local-economies-the-economic-effects-of-us-withdrawals-from-germany

(*) Free University of Bolzano and FBK-IRVAPP, Trento