The Dynamic Cost of Draft
We propose a dynamic general equilibrium model with human capital accumulation to evaluate the economic consequences of compulsory services (such as military draft or social services). Our analysis identifies a so far ignored dynamic cost arising from distortions in time allocation over the life-cycle. We provide conservative estimates for the excess burden that arises when the government relies on forced labor rather than on income taxation to finance public expenditures. Our results suggest that eliminating the draft could produce considerable dynamic gains, both in terms of GDP and lifetime utility. Keywords: Conscription; Draft; Time Allocation; Distortionary Taxation; Computable General Equilibrium Models JEL Codes: H20, H57, J22, C68
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- Imbens, Guido & van der Klaauw, Wilbert, 1995.
"Evaluating the Cost of Conscription in The Netherlands,"
Journal of Business & Economic Statistics,
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- Angrist, Joshua D, 1990. "Lifetime Earnings and the Vietnam Era Draft Lottery: Evidence from Social Security Administrative Records," American Economic Review, American Economic Association, vol. 80(3), pages 313-36, June.
- Sandler,Todd & Hartley,Keith, 1995. "The Economics of Defense," Cambridge Books, Cambridge University Press, number 9780521447287.
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