Risk premiums and optimal combat-force levels in an all-volunteer army

D. W. Kreutzer

Applied Economics, 2009, vol. 41, issue 26, 3367-3373

Abstract: Using a straight-forward and intuitive model of individual risk-wealth tradeoffs, we posit a labour market where a firm's total wage bill declines as it increases employment. Using value of statistical life estimates from Viscusi and Aldy (2003) and Mrozek and Taylor (2002), we analyze the market for security personnel in Iraq for both the US military and a private contractor. We conclude that the US military's marginal cost of labour is about $8000 less than the wage and that the marginal cost for the private contractor may actually be negative.

Date: 2009
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DOI: 10.1080/00036840701416403

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