Conscription and the developing countries

Many countries, mostly ones with developing economies, still have conscription. This study explains why, based on the costs of different recruitment systems. A conscription system can be costly to set up, and misallocates labor compared to all-volunteer recruitment, but entails a smaller wage bill. In a developing country with a highly distorting tax system, the burden of taxes needed to finance the higher wage bill of an all-volunteer military can be larger than the burdens that are unique to a conscription system. The highly burdensome taxes that the government of a developing country with a large informal sector must rely upon mean that its variable cost of staffing a government labor force or army by an all-volunteer system is greater than that of a developed country that can levy less distorting taxes. The minimum force size for which conscription has lower cost than voluntary recruitment is higher, the greater the tax distortion. Furthermore, to economize on training cost, a country with a more distorting tax system is more likely to have a lottery, with longer service obligation than if it did not have a lottery. The upshot is that a country with a distorting tax system is more likely to have conscription, and if it does have conscription, is more likely to have a lottery system, with longer service obligation than if it did not have a lottery and drafted an entire age cohort. If our reasoning is correct, countries with less efficient tax systems, wishing to recruit larger fractions of their labor forces, would be more likely to have conscription with longer service obligations. We show that such patterns are indeed present in the data—a cross section of 104 countries observed around 2012. In this way, we explain why many developing countries continue to impose conscription even as the developed countries are abandoning it.