IDEAS home Printed from https://ideas.repec.org/p/hhs/lunewp/2014_010.html
   My bibliography  Save this paper

Opportunity Cost and the Incidence of a Draft Lottery

Author

Listed:
  • Bingley, Paul

    (The Danish National Centre for Social Research – SFI)

  • Lundborg, Petter

    (Department of Economics, Lund University)

  • Vincent Lyk-Jensen, Stéphanie

    (The Danish National Centre for Social Research – SFI)

Abstract

Military conscription implicitly taxes draftees. Those who would have volunteered at the market wage may be forced to serve for lower wages, and those with higher opportunity costs may be forced to serve regardless, yet little is known about the distribution of this burden. We exploit the Danish draft lottery to estimate the causal effect of military service on labor earnings of young men across the cognitive ability distribution. We find that high ability men who are induced to serve face a 7 percent earnings penalty, whereas low ability men face none. Educational career disruption is an important channel.

Suggested Citation

  • Bingley, Paul & Lundborg, Petter & Vincent Lyk-Jensen, Stéphanie, 2014. "Opportunity Cost and the Incidence of a Draft Lottery," Working Papers 2014:10, Lund University, Department of Economics.
    • Handle: RePEc:hhs:lunewp:2014_010
    as

    Download full text from publisher

    File URL: http://project.nek.lu.se/publications/workpap/papers/WP14_10.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Grenet, Julien & Hart, Robert A. & Roberts, J. Elizabeth, 2011. "Above and beyond the call. Long-term real earnings effects of British male military conscription in the post-war years," Labour Economics, Elsevier, vol. 18(2), pages 194-204, April.
    2. Angrist, Joshua D. & Chen, Stacey H. & Frandsen, Brigham R., 2010. "Did Vietnam veterans get sicker in the 1990s? The complicated effects of military service on self-reported health," Journal of Public Economics, Elsevier, vol. 94(11-12), pages 824-837, December.
    3. David H. Autor & Mark G. Duggan & David S. Lyle, 2011. "Battle Scars? The Puzzling Decline in Employment and Rise in Disability Receipt among Vietnam Era Veterans," American Economic Review, American Economic Association, vol. 101(3), pages 339-344, May.
    4. 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 207-215, April.
    5. David Card & Ana Rute Cardoso, 2012. "Can Compulsory Military Service Raise Civilian Wages? Evidence from the Peacetime Draft in Portugal," American Economic Journal: Applied Economics, American Economic Association, vol. 4(4), pages 57-93, October.
    6. Piero Cipollone & Alfonso Rosolia, 2007. "Social Interactions in High School: Lessons from an Earthquake," American Economic Review, American Economic Association, vol. 97(3), pages 948-965, June.
    7. Angrist, Joshua & Krueger, Alan B, 1994. "Why Do World War II Veterans Earn More Than Nonveterans?," Journal of Labor Economics, University of Chicago Press, vol. 12(1), pages 74-97, January.
    8. Kelly Bedard & Olivier Deschênes, 2006. "The Long-Term Impact of Military Service on Health: Evidence from World War II and Korean War Veterans," American Economic Review, American Economic Association, vol. 96(1), pages 176-194, March.
    9. Angrist, Joshua D, 1990. "Lifetime Earnings and the Vietnam Era Draft Lottery: Evidence from Social Security Administrative Records," American Economic Review, American Economic Association, vol. 80(3), pages 313-336, June.
    10. Sebastian Galiani & Martín A. Rossi & Ernesto Schargrodsky, 2011. "Conscription and Crime: Evidence from the Argentine Draft Lottery," American Economic Journal: Applied Economics, American Economic Association, vol. 3(2), pages 119-136, April.
    11. Joshua D. Angrist & Stacey H. Chen & Jae Song, 2011. "Long-Term Consequences of Vietnam-Era Conscription: New Estimates Using Social Security Data," American Economic Review, American Economic Association, vol. 101(3), pages 334-338, May.
    12. 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.
    13. Eric Maurin & Theodora Xenogiani, 2007. "Demand for Education and Labor Market Outcomes: Lessons from the Abolition of Compulsory Conscription in France," Journal of Human Resources, University of Wisconsin Press, vol. 42(4).
    14. Angrist, Joshua D, 1990. "Lifetime Earnings and the Vietnam Era Draft Lottery: Evidence from Social Security Administrative Records: Errata," American Economic Review, American Economic Association, vol. 80(5), pages 1284-1286, December.
    15. Joshua D. Angrist, 1998. "Estimating the Labor Market Impact of Voluntary Military Service Using Social Security Data on Military Applicants," Econometrica, Econometric Society, vol. 66(2), pages 249-288, March.
    16. Joshua D. Angrist & Stacey H. Chen, 2011. "Schooling and the Vietnam-Era GI Bill: Evidence from the Draft Lottery," American Economic Journal: Applied Economics, American Economic Association, vol. 3(2), pages 96-118, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hjalmarsson, Randi & Lindquist, Matthew, 2016. "The Causal Effect of Military Conscription on Crime and the Labor Market," CEPR Discussion Papers 11110, C.E.P.R. Discussion Papers.
    2. Lyk-Jensen, Stéphanie Vincent, 2018. "Does peacetime military service affect crime? New evidence from Denmark’s conscription lotteries," Labour Economics, Elsevier, vol. 52(C), pages 245-262.
    3. Nguyen Dinh Tuan Vuong & David Flath, 2019. "Conscription and the developing countries," International Journal of Economic Policy Studies, Springer, vol. 13(1), pages 119-146, January.
    4. Lyk-Jensen, Stéphanie Vincent & Weatherall, Cecilie Dohlmann & Jepsen, Peter Winning, 2016. "The effect of military deployment on mental health," Economics & Human Biology, Elsevier, vol. 23(C), pages 193-208.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Paul Bingley & Petter Lundborg & Stéphanie Vincent Lyk-Jensen, 2021. "Brothers in Arms: Spillovers from a Draft Lottery," Journal of Human Resources, University of Wisconsin Press, vol. 56(1), pages 225-268.
    2. David Card & Ana Rute Cardoso, 2012. "Can Compulsory Military Service Raise Civilian Wages? Evidence from the Peacetime Draft in Portugal," American Economic Journal: Applied Economics, American Economic Association, vol. 4(4), pages 57-93, October.
    3. David Card & Ana Rute Cardoso, 2011. "Can Compulsory Military Service Increase Civilian Wages? Evidence from the Peacetime Draft in Portugal," NBER Working Papers 17694, National Bureau of Economic Research, Inc.
    4. Pierre Mouganie, 2020. "Conscription and the Returns to Education: Evidence from a Regression Discontinuity," Scandinavian Journal of Economics, Wiley Blackwell, vol. 122(3), pages 1112-1139, July.
    5. Torun, Huzeyfe, 2019. "Ex-ante labor market effects of compulsory military service," Journal of Comparative Economics, Elsevier, vol. 47(1), pages 90-110.
    6. Torun, Huzeyfe & Tumen, Semih, 2016. "The effects of compulsory military service exemption on education and labor market outcomes: Evidence from a natural experiment," Economics of Education Review, Elsevier, vol. 54(C), pages 16-35.
    7. Hou, Benyufang & Liu, Hong & Wang, Sophie Xuefei, 2020. "Returns to military service in off-farm wage employment: Evidence from rural China," China Economic Review, Elsevier, vol. 59(C).
    8. Siminski, Peter & Ville, Simon & Paull, Alexander, 2013. "Does the Military Train Men to Be Violent Criminals? New Evidence from Australia's Conscription Lotteries," IZA Discussion Papers 7152, Institute of Labor Economics (IZA).
    9. Fize, Etienne & Louis-Sidois, Charles, 2020. "Military service and political behavior: Evidence from France," European Economic Review, Elsevier, vol. 122(C).
    10. Erik Grönqvist & Erik Lindqvist, 2016. "The Making of a Manager: Evidence from Military Officer Training," Journal of Labor Economics, University of Chicago Press, vol. 34(4), pages 869-898.
    11. Elena Kotyrlo & Elena Varshavskaya, 2022. "Impact of the compulsory military service reform of 2007–2008 on the demand for higher education," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 30(4), pages 715-735, October.
    12. repec:hal:spmain:info:hdl:2441/45gqdl5l4387f9b9l12gr2g3kt is not listed on IDEAS
    13. Hjalmarsson, Randi & Lindquist, Matthew, 2016. "The Causal Effect of Military Conscription on Crime and the Labor Market," CEPR Discussion Papers 11110, C.E.P.R. Discussion Papers.
    14. Majbouri, Mahdi, 2017. "Sir! I'd Rather Go to School, Sir!," IZA Discussion Papers 10787, Institute of Labor Economics (IZA).
    15. Young-Min Ju & Myoung-Jae Lee, 2017. "Control Function Approach for Partly Ordered Endogenous Treatments: Military Rank Premium in Wage," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 79(6), pages 1176-1194, December.
    16. Marta Schoch, 2020. "Essays on political economy, inequality and development," Economics PhD Theses 0120, Department of Economics, University of Sussex Business School.
    17. Frank Hubers & Dinand Webbink, 2015. "The long-term effects of military conscription on educational attainment and wages," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-16, December.
    18. Vincent Aidan O'Sullivan, 2016. "The effect of military service on earnings in Britain," Working Papers 125437295, Lancaster University Management School, Economics Department.
    19. Bauer, Thomas K. & Bender, Stefan & Paloyo, Alfredo R. & Schmidt, Christoph M., 2012. "Evaluating the labor-market effects of compulsory military service," European Economic Review, Elsevier, vol. 56(4), pages 814-829.
    20. Thomas Koch & Javier Birchenall, 2016. "Taking versus taxing: an analysis of conscription in a private information economy," Public Choice, Springer, vol. 167(3), pages 177-199, June.
    21. Asali, Muhammad, 2015. "Compulsory Military Service and Future Earnings: Evidence from a Quasi-Experiment," IZA Discussion Papers 8892, Institute of Labor Economics (IZA).

    More about this item

    Keywords

    conscription; military service; earnings; draft lottery;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hhs:lunewp:2014_010. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Prakriti Thami (email available below). General contact details of provider: https://edirc.repec.org/data/delunse.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.