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Dynamic Costs of the Draft

  • Morten I. Lau
  • Panu Poutvaara
  • Andreas Wagener

We propose a dynamic general-equilibrium model with human capital accumulation to evaluate the economic consequences of compulsory services (such as military draft or social work). Our analysis identifies a so far ignored dynamic cost arising from distortions in time allocation over the life cycle. We provide conservative estimates for the excess burden that arises when the government relies on forced labor rather than on income taxation to finance public expenditures. Our results suggest that eliminating the draft could produce considerable dynamic gains, both in terms of GDP and lifetime utility. Copyright Verein für Socialpolitik and Blackwell Publishing Ltd. 2004.

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Article provided by Verein für Socialpolitik in its journal German Economic Review.

Volume (Year): 5 (2004)
Issue (Month): 4 (November)
Pages: 381-406

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Handle: RePEc:bla:germec:v:5:y:2004:i:4:p:381-406
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  1. 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.
  2. repec:iza:izadps:dp509 is not listed on IDEAS
  3. John T. Warner & Beth J. Asch, 2001. "The Record and Prospects of the All-Volunteer Military in the United States," Journal of Economic Perspectives, American Economic Association, vol. 15(2), pages 169-192, Spring.
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