Demand for Education and Labor Market Outcomes: Lessons from the Abolition of Compulsory Conscription in France

Abstract

In this paper, we examine the effects of the abolition of the compulsory conscription in France on the demand for education and labor market outcomes. The reform took place in 1997 and affected all men born after 1979. Before the reform, staying on in education was a way to defer the national service and get access to more interesting forms of the military service. After the reform, these specific incentives to stay on in education have disappeared and the relative cost of education for men has plausibly increased. As a matter of fact, our data reveal that the reform has been followed by a significant decrease in the number of years spent at school by male students, as well as in the proportion of male degree holders. In contrast, the reform had no significant effect on the demand for education for women nor for men of high socio-economic background. We use this exogenous variation in the demand for education to estimate the effect of education on wages as well as on the probability of being in a manual job at the early stage of one's career.

Keywords: Wages, demand for education, natural experiment

JEL Classification: I20, J24, J31