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Opportunity Cost and the Incidence of a Draft Lottery

  • 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)

Registered author(s):

    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.

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    File URL: http://project.nek.lu.se/publications/workpap/papers/WP14_10.pdf
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    Paper provided by Lund University, Department of Economics in its series Working Papers with number 2014:10.

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    Length: 37 pages
    Date of creation: 21 Mar 2014
    Date of revision:
    Handle: RePEc:hhs:lunewp:2014_010
    Contact details of provider: Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund,Sweden
    Phone: +46 +46 222 0000
    Fax: +46 +46 2224613
    Web page: http://www.nek.lu.se/en

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    1. Joshua Angrist, 1989. "Lifetime Earnings and the Vietnam Era Draft Lottery: Evidence from Social Security Administrative Records," Working Papers 631, Princeton University, Department of Economics, Industrial Relations Section..
    2. 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 334-38, May.
    3. 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.
    4. Joshua D. Angrist & Stacey H. Chen & Brigham R. Frandsen, 2010. "Did Vietnam Veterans Get Sicker in the 1990s? The Complicated Effects of Military Service on Self-Reported Health," CEP Discussion Papers dp1041, Centre for Economic Performance, LSE.
    5. Imbens, G. & Van Der Klaauw, W., 1993. "Evaluating the Cost of Conscription in the Netherlands," Harvard Institute of Economic Research Working Papers 1632, Harvard - Institute of Economic Research.
    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. Maurin, Eric & Xenogiani, Theodora, 2005. "Demand for Education and Labour Market Outcomes: Lessons from the Abolition of Compulsory Conscription in France," CEPR Discussion Papers 4946, C.E.P.R. Discussion Papers.
    8. Grenet, Julien & Hart, Robert A & Roberts, J Elizabeth, 2010. "Above and beyond the call. Long-term real earnings effects of British male military conscription in the post-war years," Stirling Economics Discussion Papers 2010-08, University of Stirling, Division of Economics.
    9. Card, David & Cardoso, Ana Rute, 2011. "Can Compulsory Military Service Raise Civilian Wages? Evidence from the Peacetime Draft in Portugal," IZA Discussion Papers 5915, Institute for the Study of Labor (IZA).
    10. 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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