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Military Threats, Defense Resources, and Labor Adjustment


  • Cheng-Te Lee

    (Department of International Trade, Chinese Culture University, Taiwan)

  • Yo-Yi Huang

    (Institute of Applied Economics, National Taiwan Ocean University, Taiwan)


We observe that the period between Cold War era and the event of 911, variation in foreign military threats leads to variation in defense resources and fluctuations in the labor market. Using an intertemporal optimization dynamic model, this paper explores the impacts of foreign military threats on the civilian consumption sector and on labor allocation. We show that an increase in foreign military threats could lead to a migration of labor from the civilian sector to the defense sector.

Suggested Citation

  • Cheng-Te Lee & Yo-Yi Huang, 2008. "Military Threats, Defense Resources, and Labor Adjustment," Journal of Economics and Management, College of Business, Feng Chia University, Taiwan, vol. 4(1), pages 1-24, January.
  • Handle: RePEc:jec:journl:v:4:y:2008:i:1:p:1-24

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    More about this item


    military threats; labor adjustment;

    JEL classification:

    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
    • J40 - Labor and Demographic Economics - - Particular Labor Markets - - - General


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