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Monopsony and Labor Supply in the Army and Navy

Author

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  • Beth Asch

    (RAND)

  • Paul Heaton

    (RAND)

Abstract

Because it is differentiated from other employers, the U.S. military enjoys some monopsony power. After reviewing existing estimates of the elasticity of labor supplied to the military, we obtain new estimates for the Army and Navy covering the period from 1998-2007. We employ a control function approach to account for the potential endogeneity of enlistment incentives. Our elasticity estimates of 2.4 for the Army and .4 for the Navy suggest that the services have substantial wage-setting ability. However, the Army faces higher supply elasticity since the invasion of Iraq and higher elasticity in states with weak support for obligatory military service.

Suggested Citation

  • Beth Asch & Paul Heaton, 2008. "Monopsony and Labor Supply in the Army and Navy," Working Papers 1107, Princeton University, Department of Economics, Industrial Relations Section..
    • Handle: RePEc:pri:indrel:537
    as

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    References listed on IDEAS

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    Cited by:

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    2. Perri Tim, 2010. "Deferments and the Relative Cost of Conscription," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-29, November.
    3. Anne Portlock, 2022. "Nurses without Borders: The Impact of Licensing Barriers on Employment," Working Papers 2022-03, Department of Economics and Geosciences, US Air Force Academy.
    4. Vasilev, Aleksandar, 2013. "On the cost of rent-seeking by government bureaucrats in a Real-Business-Cycle framework," SIRE Discussion Papers 2013-84, Scottish Institute for Research in Economics (SIRE).
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    6. Vasilev, Aleksandar, 2013. "Essays on Real Business Cycle Modeling and the Public Sector," EconStor Theses, ZBW - Leibniz Information Centre for Economics, number 130522, October.

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    More about this item

    Keywords

    monopsony; military; labor supply;
    All these keywords.

    JEL classification:

    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War

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