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Dynamic Costs of the Draft

Lau Morten I., Panu Poutvaara () and Andreas Wagener

German Economic Review, 2004, vol. 5, issue 4, 381-406

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.

Keywords: Conscription; time allocation; distortionary taxation; computable general-equilibrium models (search for similar items in EconPapers)
Date: 2004
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Working Paper: The Dynamic Cost of Draft (2002) Downloads
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DOI: 10.1111/j.1465-6485.2004.00114.x

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