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The Dynamic Cost of Draft

Author

Listed:
  • Morten Lau

    (CEBR)

  • Panu Poutvaara

    (CEBR)

  • Andreas Wagener

    (University of Siegen)

Abstract

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

Suggested Citation

  • Morten Lau & Panu Poutvaara & Andreas Wagener, 2002. "The Dynamic Cost of Draft," Public Economics 0210001, EconWPA.
  • Handle: RePEc:wpa:wuwppe:0210001
    Note: Type of Document - pdf; prepared on PC; to print on HP/PostScript/Franciscan monk; pages: 22; figures: included. Available also as CESifo WP and CEBR DP
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    File URL: http://econwpa.repec.org/eps/pe/papers/0210/0210001.pdf
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    References listed on IDEAS

    as
    1. Fisher, Anthony C, 1969. "The Cost of the Draft and the Cost of Ending the Draft," American Economic Review, American Economic Association, vol. 59(3), pages 239-254, June.
    2. Imbens, Guido & van der Klaauw, Wilbert, 1995. "Evaluating the Cost of Conscription in The Netherlands," Journal of Business & Economic Statistics, American Statistical Association, vol. 13(2), pages 207-215, April.
    3. 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 313-336, June.
    4. W. Lee Hansen & Burton A. Weisbrod, 1967. "Economics of the Military Draft," The Quarterly Journal of Economics, Oxford University Press, vol. 81(3), pages 395-421.
    5. John T. Warner & Beth J. Asch, 2001. "The Record and Prospects of the All-Volunteer Military in the United States," Journal of Economic Perspectives, American Economic Association, vol. 15(2), pages 169-192, Spring.
    6. Sandler,Todd & Hartley,Keith, 1995. "The Economics of Defense," Cambridge Books, Cambridge University Press, number 9780521447287, March.
    7. Ellen R. McGrattan & Richard Rogerson, 1998. "Changes in hours worked since 1950," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Win, pages 2-19.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Conscription; Draft; Time Allocation; Distortionary Taxation; Computable General Equilibrium Models;

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models

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