The Dynamic Cost of Draft

Morten Lau, Panu Poutvaara and Andreas Wagener ()
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Morten Lau: CEBR

Public Economics from EconWPA

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

Keywords: Conscription; Draft; Time Allocation; Distortionary Taxation; Computable General Equilibrium Models (search for similar items in EconPapers)
JEL-codes: H20 H57 J22 C68 (search for similar items in EconPapers)
Date: 2002-10-25
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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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwppe:0210001

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