Dynamic Costs of the Draft

Morten Lau, Glenn W. Harrison

Research output: Contribution to journalJournal articleResearchpeer-review


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.
Original languageEnglish
JournalGerman Economic Review
Issue number4
Pages (from-to)381-406
Publication statusPublished - 2004
Externally publishedYes

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