CAPITAL-LABOUR SUBSTITUTION IN UK ARMED FORCES

Peter MacDonald

Defence and Peace Economics, 2006, vol. 17, issue 2, 141-153

Abstract: This paper estimates the elasticity of substitution (σ) between military personnel and other military inputs, building on a study by Ridge and Smith published in 1991. The major difference is that this paper uses data on the average military wage, which Ridge and Smith did not, allowing a much more flexible specification of both the demand and supply equations. Accounting for a structural break at the end of the Cold War, it finds σ likely to be some small positive number, much lower than previous estimates suggest.

Keywords: Elasticity of substitution; Military manpower; Military labour (search for similar items in EconPapers)
Date: 2006
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DOI: 10.1080/10242690500512236

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