Evaluating the Labor-Market Effects of Compulsory Military Service
by Thomas K. Bauer, Stefan Bender, Alfredo R. Paloyo, Christoph M. Schmidt
(October 2009)
published in: European Economic Review, 2012, 56 (4), 814-829

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.
Text: See Discussion Paper No. 4535