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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
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    File URL: http://project.nek.lu.se/publications/workpap/papers/WP14_10.pdf
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    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.
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    4. 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.
    5. 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.
    6. 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.
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    11. 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).
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    Cited by:

    1. 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.

    More about this item

    Keywords

    conscription; military service; earnings; draft lottery;

    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

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