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The Dynamic Cost of Draft

  • Morten Lau

    (CEBR)

  • Panu Poutvaara

    (CEBR)

  • Andreas Wagener

    (University of Siegen)

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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File URL: http://econwpa.repec.org/eps/pe/papers/0210/0210001.pdf
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Paper provided by EconWPA in its series Public Economics with number 0210001.

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Length: 22 pages
Date of creation: 25 Oct 2002
Date of revision:
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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  1. Imbens, G. & Van Der Klaauw, W., 1993. "Evaluating the Cost of Conscription in the Netherlands," Working Papers 93-24, C.V. Starr Center for Applied Economics, New York University.
  2. 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.
  3. 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 239-54, June.
  4. 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.
  5. Ellen R. McGrattan & Richard Rogerson, 1998. "Changes in hours worked since 1950," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Win, pages 2-19.
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