Evaluating the Labor-Market Effects of Compulsory Military Service

37 Pages Posted: 9 Nov 2009

See all articles by Thomas K. Bauer

Thomas K. Bauer

Rhine-Westphalia Institute for Economic Research (RWI-Essen); University of Bochum - Faculty of Economics; IZA Institute of Labor Economics

Stefan Bender

Government of the Federal Republic of Germany - Institute for Employment Research (IAB)

Alfredo R. Paloyo

Rhine-Westphalia Institute for Economic Research (RWI-Essen); Ruhr University of Bochum; University of Wollongong

Christoph M. Schmidt

RWI - Leibniz-Insitut für Wirtschaftsforschung (RWI Essen); Ruhr-Universität Bochum (RUB); Institute for the Study of Labor (IZA); Centre for Economic Policy Research (CEPR)

Abstract

We identify the causal effect of compulsory military service on conscripts’ subsequent labor-market outcomes by exploiting the regression-discontinuity design of the military draft in Germany during the 1950s. Unbiased estimates of the effect of military service on lifetime earnings, wages, and employment are obtained by comparing men born before July 1, 1937 (the "White Cohort") who were exempted from compulsory military service to men who were born on or shortly after this threshold date and hence faced a positive probability of being drafted. We find that the putative earnings advantage and wage premium of those who served in the armed forces vanish when selection effects are taken into account.

Keywords: causal effect, quasi-experimental estimators, conscription

JEL Classification: J31

Suggested Citation

Bauer, Thomas K. and Bender, Stefan and Paloyo, Alfredo R. and Schmidt, Christoph M., Evaluating the Labor-Market Effects of Compulsory Military Service. IZA Discussion Paper No. 4535, Available at SSRN: https://ssrn.com/abstract=1501971

Thomas K. Bauer (Contact Author)

Rhine-Westphalia Institute for Economic Research (RWI-Essen) ( email )

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Stefan Bender

Government of the Federal Republic of Germany - Institute for Employment Research (IAB) ( email )

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Alfredo R. Paloyo

Rhine-Westphalia Institute for Economic Research (RWI-Essen) ( email )

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Essen, 45128
Germany

Ruhr University of Bochum ( email )

Bochum, 44780
Germany

University of Wollongong ( email )

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Christoph M. Schmidt

RWI - Leibniz-Insitut für Wirtschaftsforschung (RWI Essen) ( email )

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Institute for the Study of Labor (IZA)

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Centre for Economic Policy Research (CEPR)

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United Kingdom

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