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Military Draft and Economic Growth in OECD Countries

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Author Info

  • Keller, Katarina

    ()
    (Susquehanna University)

  • Poutvaara, Panu

    ()
    (University of Munich)

  • Wagener, Andreas

    ()
    (Leibniz University of Hannover)

Abstract

Economic theory predicts that military conscription is associated with static inefficiencies as well as with dynamic distortions of the accumulation of human and physical capital. Relative to an economy with an all-volunteer force, output levels and growth rates should be lower in countries that rely on a military draft to recruit their army personnel. For OECD countries, we show that military conscription indeed has a statistically significantly negative impact on economic performance.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2022.

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Length: 24 pages
Date of creation: Mar 2006
Date of revision:
Publication status: published in: Defense and Peace Economics, 2009, 20 (5), 373-393
Handle: RePEc:iza:izadps:dp2022

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Keywords: growth; augmented Solow model; military draft;

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References

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  1. Knight, Malcolm & Loayza, Norman & Villanueva, Delano, 1996. "The peace dividend : military spending cuts and economic growth," Policy Research Working Paper Series 1577, The World Bank.
  2. Ben S. Bernanke & Refet S. Gurkaynak, 2001. "Is Growth Exogenous? Taking Mankiw, Romer and Weil Seriously," NBER Working Papers 8365, National Bureau of Economic Research, Inc.
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  4. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," NBER Working Papers 3541, National Bureau of Economic Research, Inc.
  5. Lau, Morten I. & Poutvaara, Panu & Wagener, Andreas, 2004. "Dynamic costs of the draft," Munich Reprints in Economics 19265, University of Munich, Department of Economics.
  6. J Paul Dunne & Ron Smith & Dirk Willenbockel, 2004. "Models of Military Expenditure and Growth: A Critical Review," Working Papers 0408, Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol.
  7. Imbens, Guido & van der Klaauw, Wilbert, 1995. "Evaluating the Cost of Conscription in The Netherlands," Journal of Business & Economic Statistics, American Statistical Association, vol. 13(2), pages 207-15, April.
  8. Spencer, Daniel L & Woroniak, Alexander, 1969. "Valuing Transfer of Military-Acquired Skills to Civilian Employment," Kyklos, Wiley Blackwell, vol. 22(3), pages 467-92.
  9. Deger, Saadet & Sen, Somnath, 1995. "Military expenditure and developing countries," Handbook of Defense Economics, in: Keith Hartley & Todd Sandler (ed.), Handbook of Defense Economics, edition 1, volume 1, chapter 11, pages 275-307 Elsevier.
  10. Katarina R. I. Keller & Panu Poutvaara, 2005. "Growth in OECD countries and elsewhere: how much do education and R&D explain?," Economics Bulletin, AccessEcon, vol. 15(16), pages 1-11.
  11. Nonneman, Walter & Vanhoudt, Patrick, 1996. "A Further Augmentation of the Solow Model and the Empirics of Economic Growth for OECD Countries," The Quarterly Journal of Economics, MIT Press, vol. 111(3), pages 943-53, August.
  12. Hooker, Mark A & Knetter, Michael M, 1997. "The Effects of Military Spending on Economic Activity: Evidence from State Procurement Spending," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 29(3), pages 400-421, August.
  13. Jonathan R. W. Temple, 1998. "Robustness tests of the augmented Solow model," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 13(4), pages 361-375.
  14. Ram, Rati, 1995. "Defense expenditure and economic growth," Handbook of Defense Economics, in: Keith Hartley & Todd Sandler (ed.), Handbook of Defense Economics, edition 1, volume 1, chapter 10, pages 251-274 Elsevier.
  15. Fisher, Anthony C, 1969. "The Cost of the Draft and the Cost of Ending the Draft," American Economic Review, American Economic Association, vol. 59(3), pages 239-54, June.
  16. repec:ebl:ecbull:v:15:y:2005:i:16:p:1-11 is not listed on IDEAS
  17. Warner, John T., 1995. "The economics of military manpower," Handbook of Defense Economics, in: Keith Hartley & Todd Sandler (ed.), Handbook of Defense Economics, edition 1, volume 1, chapter 13, pages 347-398 Elsevier.
  18. Jesus Crespo Cuaresma & Gerhard Reitschuler, 2004. "A non-linear defence-growth nexus? evidence from the US economy," Defence and Peace Economics, Taylor & Francis Journals, vol. 15(1), pages 71-82.
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Citations

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Cited by:
  1. Panu Poutvaara & Andreas Wagener, 2011. "Ending Military Conscription," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 9(2), pages 36-43, 07.
  2. Perri Tim, 2010. "Deferments and the Relative Cost of Conscription," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-29, November.
  3. Shahbaz Muhammad & Carlos Leitao Nuno & Salah Uddin Ghazi & Mohamed Arouri & Frederic Teulon, 2014. "Should Portuguese Economy Invest in Defense Spending? A Revisit," Working Papers 2014-380, Department of Research, Ipag Business School.
  4. Thomas K. Bauer & Stefan Bender & Alfredo R. Paloyo & Christoph M. Schmidt, 2009. "Evaluating the Labor-Market Effects of Compulsory Military Service - A Regression-Discontinuity Approach," Ruhr Economic Papers 0141, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  5. Panu Poutvaara & Andreas Wagener, 2009. "The Political Economy of Conscription," CESifo Working Paper Series 2821, CESifo Group Munich.
  6. Timothy Perri, 2011. "Can A Draft Induce More Human Capital Investment in the Military?," Working Papers 11-15, Department of Economics, Appalachian State University.
  7. Bauer, Thomas K. & Bender, Stefan & Paloyo, Alfredo R. & Schmidt, Christoph M., 2009. "Evaluating the Labor-Market Effects of Compulsory Military Service," IZA Discussion Papers 4535, Institute for the Study of Labor (IZA).
  8. Hsien-Hung Kung & Jennifer C. H. Min, 2013. "Military Spending and Economic Growth Nexus in Sixteen Latin and South American Countries: A Bootstrap Panel Causality Test," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(4), pages 171-185, December.
  9. Muhammad Shahbaz & Talat Afza & Muhammad Shahbaz Shabbir, 2013. "Does Defence Spending Impede Economic Growth? Cointegration And Causality Analysis For Pakistan," Defence and Peace Economics, Taylor & Francis Journals, vol. 24(2), pages 105-120, April.

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