Empirical Essays on Military Service and the Labour Market

This thesis consists of an introductory part and four self-contained papers that study empirical questions related to military service and the labour market. Paper [I] studies the relationship between civilian labour market conditions and the number of people who volunteer for military service in Sweden. I use panel data on Swedish counties for the years 2011 through 2015 and study the effect of civilian unemployment on the rate of applications from individuals aged 18 to 25 to initiate basic military training. The results indicate a positive and statistically significant relationship between the unemployment rate and the application rate, and suggest that the civilian labour market environment can give rise to non-trivial fluctuations in the supply of volunteers to the Swedish military. Paper [II] studies how local labour market conditions influence the quality composition of those who volunteer for military service in Sweden. I estimate a fixed-effects regression model on a panel data set containing cognitive ability test scores for those who applied for military basic training across Swedish municipalities during the period 2010 to 2016. The main finding is that if civilian employment rates at the local level go up, the average test score of those who volunteer for military service goes down. The results suggest that, due to the way in which different types of individuals select themselves into the military, the negative impact of a strong civilian economy on recruitment volumes is reinforced by a deterioration in recruit quality. Paper [III] studies the effect of peacekeeping on post-deployment earnings for military veterans. Using Swedish administrative data, we follow a sample of more than 11,000 veterans who were deployed for the first time during the period 1993-2010 for up to nine years after returning home. To deal with selection bias, we use difference-in-differences propensity score matching based on a rich set of covariates, including measures of individual ability, health and pre-deployment labour market attachment. We find that, overall, veterans’ post-deployment earnings are largely unaffected by their service. Even though Swedish veterans in the studied period tend to outperform their birth-cohort peers who did not serve, we show that this advantage in earnings disappears once we adjust for non-random selection into service. Paper [IV] studies the relationship between military deployment to Bosnia in the 1990s and adverse outcomes on the labour market. The analysis is based on longitudinal administrative data for a sample of 2275 young Swedish veterans who served as peacekeepers in Bosnia at some point during the years 1993–1999. I follow these veterans for up to 20 years after deployment. Using propensity score matching based on a rich set of covariates, I estimate the effects of deployment on three broad measures of labour market marginalisation: long-term unemployment, work disability, and social-welfare assistance. I find no indication of long-term labour market marginalisation of the veterans. Even though the veterans experienced an increase in the risk of unemployment in the years immediately following return from service, in the long run their attachment to the labour market is not affected negatively by their service.