Monopsony and Labor Supply in the Army and Navy

Beth Asch and Paul Heaton
Additional contact information
Beth Asch: RAND
Paul Heaton: RAND

No 1107, Working Papers from Princeton University, Department of Economics, Industrial Relations Section.

Abstract: Because it is differentiated from other employers, the U.S. military enjoys some monopsony power. After reviewing existing estimates of the elasticity of labor supplied to the military, we obtain new estimates for the Army and Navy covering the period from 1998-2007. We employ a control function approach to account for the potential endogeneity of enlistment incentives. Our elasticity estimates of 2.4 for the Army and .4 for the Navy suggest that the services have substantial wage-setting ability. However, the Army faces higher supply elasticity since the invasion of Iraq and higher elasticity in states with weak support for obligatory military service.

Keywords: monopsony; military; labor supply (search for similar items in EconPapers)
JEL-codes: H56 J42 J45 (search for similar items in EconPapers)
Date: 2008-10
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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