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Opportunity Cost and the Incidence of a Draft Lottery

Author

Listed:
  • Bingley, Paul

    (VIVE - The Danish Centre for Applied Social Science)

  • Lundborg, Petter

    (Lund University)

  • Vincent Lyk-Jensen, Stéphanie

    (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," IZA Discussion Papers 8057, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp8057
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    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. 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.
    3. 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.
    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.

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    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

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