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Licensed Unlicensed Requires Authentication Published by De Gruyter November 30, 2019

Dynamic Costs of the Draft

Morten I. Lau, Panu Poutvaara and Andreas Wagener
From the journal German Economic Review

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 work). 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.

Published Online: 2019-11-30
Published in Print: 2004-12-01

© 2019 by Walter de Gruyter Berlin/Boston