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Lookup NU author(s): Professor Morten Lau
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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.
Author(s): Lau MI, Poutvaara P, Wagener A
Publication type: Article
Publication status: Published
Journal: German Economic Review
Year: 2004
Volume: 5
Issue: 4
Pages: 381-406
ISSN (print): 1465-6485
ISSN (electronic): 1468-0475
Publisher: Wiley-Blackwell Publishing Ltd.
URL: http://dx.doi.org/10.1111/j.1465-6485.2004.00114.x
DOI: 10.1111/j.1465-6485.2004.00114.x
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