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Security Gradient and National Defense - The Optimal Choice between a Draft Army and a Professional Army

  • Vesa Kanniainen
  • Staffan Ringbom

The earlier work on the optimal design of the national security has focused on the opportunity cost of the draft in terms of foregone human capital formation. The current paper introduces the national security into the welfare analysis missing from the earlier work. This creates a trade-off between the private goods and the security as a public good in the social cost-benefit analysis. There are three major results. First, and arising from the intergenerational interaction, it is optimal to introduce a pay to the young generation when in duty even by resorting to a distortive tax. Second, when optimizing the size of the army, the optimal choice between the draft army and the professional army depends on the risk class of the country. A security gradient arises. Third, the choice is linked to the size and the quality of the reserve generated by the two approaches.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2014/wp-cesifo-2014-03/cesifo1_wp4707.pdf
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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 4707.

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Date of creation: 2014
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Handle: RePEc:ces:ceswps:_4707
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  1. Panu Poutvaara & Andreas Wagener, 2005. "To Draft or not to Draft? Efficiency, Generational Incidence, and Political Economy of Military Conscription," CESifo Working Paper Series 1454, CESifo Group Munich.
  2. Keith Hartley & Todd Sandler, 2001. "Economics of Alliances: The Lessons for Collective Action," Journal of Economic Literature, American Economic Association, vol. 39(3), pages 869-896, September.
  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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