Security Gradient and National Defense - The Optimal Choice between a Draft Army and a Professional Army

23 Pages Posted: 16 Apr 2014

See all articles by Vesa Kanniainen

Vesa Kanniainen

University of Helsinki - Department of Political and Economic Studies; CESifo (Center for Economic Studies and Ifo Institute)

Staffan Ringbom

Swedish School of Economics and Business Administration

Date Written: March 16, 2014

Abstract

The earlier work on the optimal design of the national security has focused on the opportunity cost of the draft in terms of foregone human capital formation. The current paper introduces the national security into the welfare analysis missing from the earlier work. This creates a trade-off between the private goods and the security as a public good in the social cost-benefit analysis. There are three major results. First, and arising from the intergenerational interaction, it is optimal to introduce a pay to the young generation when in duty even by resorting to a distortive tax. Second, when optimizing the size of the army, the optimal choice between the draft army and the professional army depends on the risk class of the country. A security gradient arises. Third, the choice is linked to the size and the quality of the reserve generated by the two approaches.

Keywords: national security, draft, professional army, risk class

JEL Classification: H200, H570, I210, D630

Suggested Citation

Kanniainen, Vesa and Ringbom, Staffan, Security Gradient and National Defense - The Optimal Choice between a Draft Army and a Professional Army (March 16, 2014). CESifo Working Paper Series No. 4707, Available at SSRN: https://ssrn.com/abstract=2425511 or http://dx.doi.org/10.2139/ssrn.2425511

Vesa Kanniainen (Contact Author)

University of Helsinki - Department of Political and Economic Studies ( email )

P.O. Box 54
FIN-00014 Helsinki
Finland
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+358-0-191-8877 (Fax)

HOME PAGE: http://www.cesifo.de

CESifo (Center for Economic Studies and Ifo Institute)

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HOME PAGE: http://www.CESifo.de

Staffan Ringbom

Swedish School of Economics and Business Administration ( email )

P.O. Box 479
Helsinki, 00101
Finland
358 9 4313 3416 (Phone)
358 9 4313 3382 (Fax)

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