ABSTRACT
This chapter discusses the use input-output analysis to estimate the degree of defense sensitivity for each major industry and each state. It explores the degree of defense sensitivity for each industry by the effect on employment in each industry of a uniform, 1-percent change in real defense purchasing. The chapter explains the measures of industry sensitivity, together with data on industry composition by state, to estimate the degree of defense sensitivity for each state. It argues that the industrial composition of Connecticut makes it the state that is most sensitive to defense spending and, therefore, most vulnerable to defense cuts. The chapter illustrates the intrastate variations in defense sensitivity by using data on the industry composition of metropolitan statistical areas in Texas. Applying the estimates of industry sensitivity to the industrial composition of the several metropolitan statistical areas reveals that they also have very different sensitivities to defense purchases.
