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AUTHOR WitherAi Glenn Alexandei' TITLE The Political Economy. of Military Manpower Procurement in Peacetime. ,SPONS AGENCY - Manpower Administration (DOL), Washingtdn, D.C. Office of Research and DevelOpment. REPORT NO DrmA 91-25-4 -47 PUB DATE Dec.74! NOTE Thesise_Harvard'University AVAILABLE FROMNational Technical InfOrmation Service, Springfield, Virginia 22151 (No price given)
EDRS PRICE HF-$076 HC-$13.32 PLUS ;POSTAGE
,DESCRIPTORS- - . Career Choice; Cost Effectiveness; Costs; *EcOnomic Factors;: Economic Research; Efficiency; Labor Supply; *Manpower Needs; Military Personnel; *Military; Service; Models; National Defense; *Recruitment;' SOcial Factors; Statiitical Data;, Tables (Data); ,9 *Volunteers IDENTIFIERS All Volunteer Armed Forces,
ABSTRACT The study examines military manpower procurement for Peacetime'. It considers the broad'alternative_systems of conscription and"voluntarism and develops models.of demand and supplY for military- labor to show how these are affected fxy the choice of proburement system. Empirical.- applications are made using vidence from _ Australia, Canada, Great Britain, and the-United:States.,Evaluation of the aiterhative systeMs in the peacetime context is made in terms of allocative'effici4ncy, distributional, effects, adjustment flexibility, and issues of social Control. Although the budget cost of a volunteer forde IS usually greater than that of a drafted -one, it was found that'a peacetime draft of a professional.standing military would impose real. economic costs .not present in the volunteer system. The volUnteer force-would better serve the distributionalscriterion of equity and could be supplemented by a draft for reserves, possibly lottery, and a tand-by draft for major exp4nsion. In general, finding's favored'an all-volunteer recrdifient for active duty in peacetime. AppendiXes tabulate and identify data.
(Author/MTW), ' .
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U S DEPARTMENT OF HEALTH, EDUCATION &WELFARE NATIONAL INSTITUTE OF EDUCATION THIS,or DOCUMENT HAS BEEN REPRO DUCED EXACTLY AS RECEIVED FROM THE PERSON OR ORGANIZATION ORIGIN ATiNG IT POINTS OF VIEW OR OPINIONS SYATED DO NOT NECESSARILY REPRE SENT OFfiCIAL NATIONAL4NSTITUTEOF EDUCATION POSITION OR POLICY
V
THE POLITICAL ECONOMY OF MILITARYMANPOWER PROCUREMENT .
. INTEACETIME
A thesis piesented
- by Glenn Alexander Withers to The Economics Department- ih partidl fulfillment of the requirements for the degree of Doctor of Philosophy L.--tin the subject of Economics
Harvard University Cambridge, Massachusetts Y December, 1974
4
qt 2 81131.1:JC/RAPHIC DATA 1. Report No. 3. Recipient'sAceassion No.. SHEET DIMA 91-25-'7.4-47 ita an. tit - 5. Reportate The PoliticalEconomy of Military Mahpower Procurement January 1975 in Peacetime . 6. . .. /
7.' f -. , 13. Performing Organization Rept. Glenn A,. therm . No. .... 9. Performing Organizationi Name and Address 10. Project/Task/Work Unit No. Department of Economics Harvard University _ . it Contract/ Sant No. Cambridge, Massachusetts02138 .
. . DL 91=274447
12. SpOnsoring Organization Name and Address 13. - Type Of Report & Period U,S. Department of Libor Covered Manpower Adiinistration
. Office of Researchand Development- . 14. . 1111 20th St.,N.W., Washington, D. C. 20210 . 1
15. Supplementary Notes . . .
- 16. Abstracts , A The study examines militarymanpower procurement for peacetime. It considers _ the broad alternative iystems Of conscription andvoluntarism and models of demand and supplyefor military labor'are developedto show howthese are affected bythe choice of procurement system. 'alpirical applicationis made using evidence from' Australia, Canida,'Great Britain, andthe United States, Evaluation of the alter., native s#stems in the peacetimecontext As made in.terms of allocative efficiency, distribiltional effects, adjustment fleicibilityand issues of social control, , . . . .
...... , . .. . . _ : . , . _,- . . , .
17. Cey Words andnocument Analysis.17a. Descriptors
Demand (economics) ,
. . . Economic Analysis . Z/ , . ---
EcOnomic Models . :. .' . . Employment , .
_Government Dolicies . . Manpower : . Military-Personnel ,
Recruiting .. . Supply.(economics1 . , 4 .. . . . 17b. Identifiers/OPen-Ended Terms .
Australia -- , . Great. iitain . % Canada ,t ( . . , United States ...- . . .
. .. . , ,
. . ,
, .. . 17g COSATI Field /Group , . - 18. Availability StatementDistribution is unlimited. 19. Security Class (This 21. No. of Pages Available from National Technical Information. Report) . Service, Springfield, Vs, 22151.22151 20. Sceurity Class (This 22. Price - Page itNct A5SIFIPT) FORM N TIS35 I REM. 3.72/ -.... a THIS FORMWAY BE REPRODUCED VSCOMMOC 14 52. 72 CONTENTS
List of Tables
List of Figures V, Acknowledgement
Chapter:
1. Institutional -and Historical Badkground;_
- 9. Markets and Bureaucracy. )
International C9mparisons ,. . , .. Procurement System Alternatives,
' 2. Fiscal Politics and Conscription. 18 An Economic Model of Institutional Choicit Political Epliironment and Voter blativatipn Further Empirical Evidence
3. Manpower Requirements-under Alternative Procure- merit Systems '39 Defense' Manpower Planning 7 ir Alte rnative Recruitment SysteMs: 4 Differences in Accession Levels Differences in Personnel Quality
4. Military Manpower Supply 72 Theoretical Model EcohometicMethods Estimates of Variables Empirical Results Feasibility in Manpower Probureent. O
5. Evaluation of Alternative Procureerill*items 126 u . Allocative Effects: Labor Turnover SUbstitution vs..,MonOpsOly
Preference Abrogation . A. Uncertainty arid Avoidandp,
1 16
Distributie Effects:.
Conscription as-a :,Tax 1r Equity.in Taxation f Equity. in Condition 'Force Flexibility Issues of Social'ContrOL
Conclusion and Summary
Data Appendices
Chapter 2
Chapter 3
Chapter 4'
Chapter 5
'Notes
...
111111.. LIST OF TABLES
Table:
1 1 Defense Ekpenditure,, 100-1973 f 1.2. Defense Expenditure by Functional,Categpry, 1972 9
1.3. .Defense Manpower, 1973 9
2.1. '";' Opinion on Conscription, Canada, 1974 . 32
2.2. Opinion Cn Conscription, United States, 1968 33 2.3.. The Australian Conscription Referendum of 1917:
Cross Section Regression Analysis 34s-
. . 3.1. International Force Structure Diffefences. 51 1.2. Retention Profiles for Male Army Enlistees, Australia and United States 55
3.3. Loss Rates for GivenRetention Profiles 56
3.4. Personnel Requirements under Draft and Volunteer Ag. Recruitment:' Annual Accessions 59
3'75 Supply of Army Re-enlistments:Regression Analyses 61 3.6. Occupational Distribution of Army Enliitees: United States, 1965-1974 65 3,7, Mental Category Distribution of Enlistees and
Non- College Civilians 1 70 O
4.1. . Attitudes Toward a Military CCareer - 83 .0 4.2. Trends in Military Tastes, Britain1971-1974 96
4.3. .Elasticities of Enlistment Supply:.Augtralia, Quarterly. 108 49.4. ElastiCities of Enlistment Supply: Great,Britain,
Qdarterly . . ' 109
J
c
A / 4.5. Elasticities' ofEnlistment,Supply: .United States, 116 Quarterly
4.6., Elasticities oEnlistmentSupply: Canada, Annual by Region'
4.7. Elasticities ofEnlistment Supply: Australia, 111 QiiarterlY by State
4.8. Required Military income 128
4.9. Budget Costs under Differing Procurement Systems '130
5.1. Employment Status of Veterans and Noe-Veterans- U.S. 136 5.2. Difficulties with Employers and Career Choice -o 138 . 5.3. Education Impacts Of Conscription: 'Regression' ' 158 Analysis
5..4. Marriage IMpacts of Conscription: Regression Analysis .160
5.5. Adjustment Lags in'Enlistment Supply
I. Appendix Table:
, . 4.1. Regressidn Analysis: Erilistment Supply, Australia, A22 Quarterly
4.2. RegressionAnalysis: Enlistment Supply, Great Britain, A23 Quarterly
4,3. Regression Analysis:'-Enlistment Supply, United States, A24 Quarterly
4.4.. Regression Analysis: Enlistment Supply, Canada( Annual A25
4.5. Regression Analysis: Enlistment Supply, Australia, A26 Qua'rterly by State
1 LIST OF FIGURES o
Figure: '
3.1. Defenge Manpower Planning 41
4.1. Military Labor Supply Function 77
.4.2. The Quality.Adjusted Supply Curve, a 105' , . . . 5.1. The*Substitution Loss under Conscription, 140
A 5.2. The Monopsony Welfare Loss under Voluntarism 143
5.3. Preference Abrogation Welfare Cost under Random 148 Conscription
.
r -; ACKNOW)DGEMENTS
A considerable debt is due to the staffs of the various
defense agencies'in Canberra, Ottawa, London and Wahington,
who provided factual material in an area,where so little data
is readily available. " r My supervisors, Profess9rs Arthur Smithies and Richard
Freeman, provided me with much needed encouragement and with
a continuing flow of comments and suggestiond. They. were
always accessible and helpful and my sincere thanks are
offered to both.
Rich Baughman was an indefatigable programmer working
long hours for the cause, and Marion Powell rendered sterling
assistance in research above and beyond the call of duty..
Alvene"Williams and Saundra Henderson saw the typing through
its many redrafts,, and did so with unfailing efficiency and
goN"Jtheer.
1 For all this 2 am most grateful, and I correspondingly
assume full responsibility for the use made of this1/4 assistance
and for the final*product: this dissertation..
r The material in this project was prepared under
Grant No., 91-25-74-47 from the Manpower Adminiptration,.
. U.S, Department of L7bor, Unddi the, authority of:Title I
of the Manpower Development and Training Act'of'1962.
Researchers undertaking such projects under G6Vernment
, Sponsorship are 6ncouraqed to express freely their pro-
fessionaijudgpent.fessional Therefore, points,of viewvi or opin4oils stated in this document do not necessarily represent the
4ficial positionor policy of,the Department Of.Labor.' I'
The p rtmept of Labor' assistance is gratefully
acknowledged.
.P
et.
f
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4 14
4 CHAPTER 1. INSTITUTIONAL AID HISTORICAL BACKGROUND
"Everyone will now be mobilised, and all boys old enolutt to carry a spear will.be sent to Addis Ababa. Married men will'take4 wives to carry and cook. Those without wives will, take any woman without a husbapd. Anyone found
, at home after receiptof,thi's,order will be hanged." Emperor Haile Selassie of Ethiopia, 1935.
In that best of all possible worlds there would be no
warfare and hence-no need for national armies. In our world
the fact of war'and standing armies must be taken-as given.
Each nation feels that-its only protection against other
nations is to,arm adequately.'The irony is that this very
P b military preparedness' only makes war.all the more certain,
and all ,the more'devastating when it occurs. We are caught in
a'system'of international irresponsibility, for which the only 1 evident long -term solutions are national disarmament And the
establishment 'of anbffective:4orld,political order.
For the-_preplifit resort to military force to advance
national interests and to settle international disputes will
. continue, and even those nations which see themselves as
most disposed to the pursuit of .peace will feel it necessary
to maintain standing military forces for self-defense. The
concern'of this dissertation is with how theseistanding
armies are raised. ' ,
L In many Cotntries the military is .one of the largest
single industries.. In the U.S., for ,in'stance; over seven
percent of GIP has continued to be allocated for defense
even since Vietnam, and, the defense establishment in 1973 . - employed almost 3.4 million people on a full-time basis.
on,
-4 1 ? a. -2-
0-
Only, six', states in the U.S. have a greater number of working
people.than the armed forces. , Such a major component of the nation's e conomic life
would seem worthy of the professional'attention of economists,
Yet the military is much' negleated, as for instance in .the - . textbooks whiCh introduce economics to the student.1While
there are various reasons for this neglect, undoubtedlya
majOr factor is that, Military institutionsand purpose do not.
seem to.lend themselves very readily, to the competitive
market approachbf conventional economics.
Markets and Bureaucracy. 4 Defense Is not a good providedloy private profit-seeking,
to producers to be purchased through commercial exchange 8y
individuals for their private consumption. rather a public good generating a collective benefit not appropriable
by single individuals, an d one p rovided by--a bureaucratic
. monopoly organization, in an amount decided by a political
process."
Our interest is in the military as apanpower institu-
tion,, and it follows that the demand for military labor
correspondingly is not one derivable by private producers
from market demand forthe product of that labor, but is, , instead, one derived by governmenT\administrators in meeting
the deLfense demands emerging from the political process."
. The supply Of military labor is similarly removed
from ,the market in two important ways. The °first is that ry ,
", the aature-of jolo skills --with a high .element of specific.,
,, non - transferable skill acquired over a pertiod through formal. 0
And on °-the -job training -in a structuredjot,progi a
tequence:- and the presumed national security req
, ° or,control and availability of those skills, havd estab-.,
etkail 'internal labor muket!' within whichpay and ing and allocation of_labor,ate governed by administrativd
rules and_procedures rather than free response to market rices.2*
Exit from.this labor market'is thus carefully.regUlated
and hiring takes place exclusively at a'small number of
Specified pointS, each at the bArriing ofa .highly structs: . , fired promotion ladder. Most jobs are 'olcised to outside
hiring and arefilledonly by a well defined internaljob
mOveMent pattern.' Market contact is maintained only at
the entry and exit points, where attraction and retention
is determined.
Moreover even at the'entry point, the military labor
system .may.still be removed from-market influence by a,
second.. factor viz. the power of conScription. Apart, front
the minor fellow exception of jury service, .the military
the nl. y employment for which a labor levy isnow com-
. monlyiiposelPIn a 1970 survey, Roy Forward 'found that
3, eighty-five countries used-compulsory military service. ,
Because of theSe institutional, features, the Military
labor system .presents a significant 'contftst with the 044 ;
1 4, T
- private competitive labor markets pictured in standard
. economic theory. The divergence-iswell illustrated by
' ;"'' considering the classic proposition of competitive micro- .
theoTY that employment equilibrium for the firm will
, obtain with marginal wage cost equalto marginal revenue
product, .of, labor,
For the military employer, however, there is no sales
- revenue, marginal physical product is difficult to define
even conceptually; the military manager is not constrained
to profit 'maximizing behavior, the wage may not be aomarket
9 wage due to the operation ot a draft, and the specificity,
of training and its mutual benefit,to both employer and
employee, means that the wage level is, within a range,
indeterminate'anyway.
Reflecting these divergences from privatecompetitive
labor market patterns, are the unique conditions ofemploy- ment of the,military. the requirements. for socialization,
control and ready 'availability and return on specific skills,
have meant a total commitment to service life by military
4 personnel including a fixed term ,of engagement, liability
'fc;r 24 hour service availability:closeness to service life
. outside of normal working hours, frequent repostingmove- ment, inability to resign, strike or negotiate over working
conditions, and subjection to military discipline. All of this is associated with the frequently trying working a conditions and the-dangers and, risks-inherenst inboth military training and actual operations.
Some,of'these conditionsof employmentare to be
found in civilian life,. But this it-infrequent, &leithe . - (total combination of conditions is nowherenearly approxr .4 imated, a fact which has in turn ledto the traditionally'
paternalistic Military pay structure, repletewith such.
features as a large part of pay being received in allovit.,
ances or non-cash form (food and'houtingj, with different
payments to married vs. single Personnel. The philosophy
is one of need, rather than contributionto national def-
ense,i view also reflected in the limiteddifferentiation.
of compensation across skillgroups, and'in the large
proportion of compensation receivedas deferred (retirement) pay.4
This dissertation, however, doesnot review all
aspects.of the military labor system. Rather-it seeks'to focus on what has been the publicly most contentious
. element of the system - the use .of conscription for military
service.
Ic Conscription is a topic that generally has no.t,been I
well served by scholarship. The wide range of issues
involved and the depth of public feeling on the question, . $L- have not matChed' well the scholar's propensities for
narrow specialization and presumed objectivity., To meet 0
" these difficulties we have felt it usefulhere to broaden
-. ...:-' i. t- . the approach to thatrof "political economy" c-. and give delib-- . c ; , erate attention to some of the politiCal factorsand value , . . 0
'Considerations in'oived in the probleM'where these can be --. 'elucidated by econoinic analysis.
Naturally the extended topics so chosen, andthe treat-
-mentafforded them, reflect the biases and valuesof the
wiiter. But to expect/Otherwise Would be foolish. '!"Object-
ivity" does not mean "value-free" enquiry.,It means rather'
that value assertionsshould be recognized and labelled 4 as openly as one's awareness of them permits,that alternative
viewpoints be recognized and, fairly considlird,and that
one's approach be reasoned"and analyticalrather than
assertive and emotional. This is an approach that is not
Oa at'all incompatible with conviction and concern;and it is
therefore the approach we have attempted tofollow here.
In analyzing the choice-of militarymanpower procure - me it systems, we confine our attention to the situation of
A peacetime, or limited war, military.labor needsonly., One
$ reason for.this is.that good data could be obtained for
.these situations. More importantly, though, the adminis-
tratj.ve advantages of conscription for largescale mobil- ization are mOre readily conceded, and theequity and-.
liberty objections to a draft are less weighty,.inthe presence of a clear and substantive danger to-the nafiori O AY.
.4 27-, 0
though this does hot say that conscription will still not
be controversial for other reasons in this situation,as, for example; Australian and Canadian experience during
World Wars I and II shows.
International Comparisons
yr, second 'delimitation is that we will be prirtia;rily
concerned with the experience of two countries: the United
States and AUstralia, both of which have recently turned
to all-volunteer"forces after considerable public debate
over their experience with Selective Service and National
Service, respectively, in the 960's. For further compar-.
ison, frequent reference will also. be made to the experi-
ence of Canada and Britain, both of ;which have now main-,
tained all-volunteer forces for some time--though Britain
after'a period'of conscription in the 1950's.
In the Australian and American draft debates,, frequent
.reference has been made to overseas practice. In Australia
the Prime Minister Sir Robert Menzies defended National.'
Service by asking: "How could we ,possibly takeup the
attitude that whereas conscription for military service
might be all right for allies and protectors, itwas
(F1 no good to us, for local political reasons?"5The Gates
Commission in. the United States examined foreign experience
"to anticipate problems which might arise once the draft
was ended in the United States:,6
We have restricted the comparison in this study to
C .Britain,ritain, the United States.and Australia, since
4 1-7 -8-r
foreign experience is to be most meaningfift for a
groipdf countries" with similar cultural circumstances.
Each of these pouiltries° is an industriallydeveloped demo- ..
cracy with amixed fiee enterprise economic sydtem'anda
- population of predominantly Britistx origin andtraditions, . is withcomparable styles ari.# standa45s ofliving. Tables
1.1-1.3 outline the relative defenSe'expenditures,their disttibution and associa manpowecfor the four countries.
' . )* Of coUrse, overseas periencecannot.be directly - ;1 transplanted, and compariSons must be made with theutmost
care, making full allowance for the etucial differencesin local circumstances which ill remainno matter how dare- :-A, , fully the countries are b.hosen fOr theirsimilarities. The
diverse historical experience of Canada, . I he U.S.. I and Australia with conscription certainlyindicateethe
importance' of these uN:que circumstances,as -a brief 6urvey of that history illusjrat
Ofthe four countries Camida has been the moststrongly c' attached tothe,a11'volur4eerprinciple. Since.Canadian, regular forces were frstlestablished in 1871, conscription
has ,been adopted only twice: in October 1917 for theOur- . ation of World. War I and ii 194d-45. Even in these two
instances volunteers co tiredto provide the great bulk
of Canadian service In World War II, of the
1,086,771 Canadians who sewedall but 100,573 were volunteers.
0 I
TABLE 1.1. DEFENSE EXPENDITURE, 1970-197,
GNP Defe/ise Budget Per billidn Capita $ Percentage of. GNP 1970 1973 1972 1969 1970 .1871 1972.
United States 976.4 83.4 '85.2 399. 8.4- 7.2 Canada 82.6 2.0 2.1 90 2.4 2.4 2.0 1.9. Britain 121. 7,0 8.7 12.,5 5.0 4.9 4.5' 4.6 Australia- - 32:8 1.6 12.1 4.2 3.5 3 .9' 3.6'
."1 TABLE 1.2. DEFENSE EyENDITURE BY FUNCTIONAL CATEc,ORY, 1972
USA CANADA BRITAIN AUSTRALIA"- Functional , % ,$Cm % % 0 c4l'a $Am , Compensation 35,812 49.7 i,329 63.6 1,224 45.2 606 49.8 ' Maintenance 12;239 17.0 .' 548 26.2 343 12.7 379 1.1 Total Current 48,051 66..7 1,877 89.8 1,567 57.9 985 80'., -, PrOcurement 16,347 22.7 127 6.1 674 24.9 14d4 11.5 R. & D 6,488 9.0 49 2.4 307 11.3 50 4.1 Other Capital 1,177. 1.6 35 1.7 '159 5.9 43 3.5 Total' Capital 24,022 33.3 211 10.2 1,140 42.1 233 19.1 Total 72,073 100.0 2,088 100,0 2,707 100.0 1,218 100.0 .
TABLE. 1.3. DEFENSE MANPOWER, 1973 . . .' .f Percentage ' . Regular Total Men of Regular Armed Forces s Civilian of MilitaryFor.POS to Men .(Incl. Defense - Trained- Age (i.e. of Military Country Conscripts) Personnel Reservist's 18 - 45) .. Agd . United States 2,252,900 t:1,132,900' 92.7.7-400-- 38,700,000 5.8 Canada .. 83,000 40,100 23,200 4,500,000 1.8 Britain 361,500 323,900 435,000 10,800,000 3.3 . .. Australia 73,330 51,300 32,300 2,6Q0,000 2.8
Source: Internatidnal. Institute for Strategic Studies O The Military Balance, 1573-74. Canadian partic4ation in the Korean War and in otherU.N.
peacekeeping operations, has beepall-volupteer. Since 1963 recruitment his been to a single Agified military service
, numbering a' little under 85,000 in tecentyears - a reduc.7-
merit made public:in the. White \Paper onDefense, 1971. Undoubtedly a major factor underlying "Canadianman- power procurement policy has been the problem ofa trench - Canadian minority,. whichforms one' -third of the population and which has traditionally resisted conscriptionfor ear of being compulsorily involved .in wars relatedto separate . anglophone interests. According.to'Col n,'Gray it is Mr this reason that "conscriptionhaq remained one ofthe ugliest ) and most divisive words in the Canadian politicallexicon. . The gravest threats to the polifical,integiity ofCanada' ; in this century arose out oethe conscription crises,of 1917, 1942- and 1944'1-.7 . . . 4 4, , ! In Australia,compulsormilitia-typeyr training has.,' . been-quitecommon but, as with Canada, conscription for , regular service with the permanent forces has been rela.' tively rare and attempts to impl-6ment such schemes haye been ,invariably controversial. In World War I, the govern- , ment appealed twice to the electorate for thepower -to.conscript fdr overseas service, and was, twice rejected in referenda. Only volunteers served. Similarly, fOr- °World' War II, only volunteers served inthe regular forces overseas, though in 1943, afterconsiderdbledebate,, 2 , liability for service in the South-WestPacific was extended to the conscript militia foices. In 1a64, a scheme of -conscription' into the regular forces,using alottery dkaft,' was instituted, and this relthinedin Operation. until 1972, .since,which time there'havebeen a/1;volunteet forCes. The AustrAlianforcesnow number 7,4,000 (1973), a reduction fom.the 1970 Peak of 86,913, reflecting Vietnam withdrawal and the Labor government . reassessment of the earlier "Forward Defense".strategy. - O The dominant influence. in the historyof military manpower procurement in Australia has been theideological 'opposition of the Australian Labor Partyto compulsory military training and, evenmore, compulsory service over- seas. This opposition has been such that fewother public questions have matched the conscription crisesof 1916-17, 1943 and 1964-72 for their bitter and divisiveimpact upon >Australian society. a , British experiende with conscription hasbeen, less acrimonious. For most of its history, in fact, the British military has been a professional force,with conscription sometimes applied for the territorial militia. It was only with'the emergencies of WorldWar I and II that conscription began to be used for regular service, andfrom 1945 to $ 21 -12- 4. 1960 a National Service schemecontinued to supplement voluntary military enlistpent. Since 1960, the armed services have returned toexclusive reliance upon volun- tary enlistment. The transition was associated withthe 1957 re-evalilation of 'defense strategy;which saw Britain deciding to cut backon its internajional military commit- ments, and-moving to strengthen its nuclearretaliatory: power. This strategic switchaway from conventional forces meant a deliberate strength'reduction from 690,000 in 1957'to,375,000 by 1962. Today the forces number .around 362v000, (1973). There has been more resort to.'congCriptionby-the United States than the otherthree countries - despite . the legacy of aNew England threatof secession from the Union during the War of 1812aver,theissue of conscription, and the bloody New York draft riotsof 1863 which left more than 1,000 dead in street fighting. Thus in both O World War I and II comprehensivedraft laws were enacted and' provided the bulkof military manpower. Indeed in 1.918p voluntary enlistments were forbidden forthe remainder of, the War. After a,short lapse following WorldWar II, Selective Service was revived in1948 and continued inopera- tion until 1973. . Selective Service provideda significant-pro- ** portion of the manpower for theKorean War and for Vietnams The adoption of all-volunteer forcesfollowed U.S. combat troop withdrawal from Vietnam in 1973, and wasassociated with 4 ! 424. -13- , the Nixon strategic reassessment Aefined in the "Guamdoe- trine," restricting U.S.ground force involvement inAsia. The.militaryforce's now total 2.25 million(1973), which is down from the Vietnam peak of 3.55 million, and 450,000'less' than the 1964 pre- Vietnam strength. The.draft machinery is .retained on a stand-by basis. ,Despite the similarity of , the recent-trend tp fully ' ,. . - . . 1 volunteer forces in the. fourCOuntries, , ) the divergent histor- ical-backgrounds clearly give-riseto caution in arawing strong conclusions. The importance of particularstrategic circumstances for example, 'suggests,we should avoid .grand , declarations" of .thy .sort "thatwd'are witnessing the end,or at leat 'the transformation of the mass army" (GwynHarries- Jenkins). But equally. we 'must not losesight of the*aavan- tages to be :gained by supplementingdirect analysis With alternative insights. it is clear that such-'compari'sons. % are going to continue to' be' made,so that it it better that, at least,,the analogy beas informed as possible. Citation in the past has often been highly selective and.impression -' istic. Besides, provided foreign-experiencei-sliotAre'ated as more than suggestive,we can seek solace in Boulding's First Law: "If it exists, thenperhaps it is possible." Procurement System Alternatives A thIrddelimittion of the studyis to.-focus on the 6 . institutiOnal:Choice.betweenall-volunteer forces and draft s s- . systems of thesAustralian lottery . or U.S. Selective Service- 2:1 , typ. These were the systems . . actually in-operation in the , four countries illthe past fifteen,years, and the systems for which'we thereforehave some reasonable evidence.'Other draft systems will be occasionallyalluded to, but no System- . atic evaluaticn will bepresented. The further basic'(and heroic) assumption is thatiinthe four countries. td be . considered, the practicalpolitical choice now actually/comes f down to one between all - volunteer forces or a, draft ,of the- lottbry or.,Se/ective,Servicetype. We thus put aside discussionof such fringe alternatives t as unilAeral disarmament and civil resistance,bas well as , such more kreqtently_proposed alternatives'as . universal con- Sdiiption or nationaiservice:-Because of their more common advocacy - though, we shouldturn to'these, latter-two briefly. UniverSal conscriptioncan beinstituted in two forms: uni- versal military training,pr universal militaryrseivice inhe regular forces. The main advantage of bothforms is the ap- . parent improvement in equity,with wide-Spread sharing of . military' burdens. The main disadvantagesare inefficiencye, and interference with individualfreedom -- the,social and , economid, disruption beinglarger for universal conscription .. for regular service." The questionbecomes oneof"whether,the 'balance of advantages is suchas to justify such .a draft in time of,peace or limitedwar. The'eciphomic burdenusually decides against universal-con'scriptionforthe permanent . 24. --15- 1- forces in,theseltimes, andwhether the alternative militia training arrangement is justifiedwill depend Closely,upon. ''the likelihopd of a massive tOrritOrial invasion. This.' readily explains the relianceof neutral natitons suchas I Switzerland, Finland, Swedenor Yugoslavia uporvextensive. militia arrangements. Fort4four countries we will inves- r t ig at e, however the need, forterritorial and non-allianCe = defense seems small present, and the consequentdemand A , is for a smaller professioTialmilitary with standing. forces y . available for overseas service andtb%provide' andmaintain e the framework.fOr futureexpansion. Accordingly we put aside direct investigation'of universal militarytraining. and service. 'This disposition, conformsto the 'deliberate limit . . , / ation already placed onthis study to consideronly the mans- , . . , . power procurement system appropriatetoa peacetime standing prafeasional.military force. The military here considered . is specificallyone which aims at keeping the . officere senior.. enlisted'and skilled specialiststruoture,intact, supported by sufficient generalenlistmeht to enable the forceto practise and advance the militaryarts, tomeet 'brush,,:.Fire" and "small- -war" needs from the established resources,,and to provide the manpower nucleus,equipment and organisational . structure for expansion in theevent of a threat of larger . / Scale hostilities. Hdw that expanilon itself mightpe ac- complished and'Ststained,whetherby reserves or new enlist-. thents and whether by draftor volunteer.rec7uitment,is 'A 36- 7.16t considered - but it is not'the focus of-thegreater part of, the study, whictixestricts itselfinstead to'the.standng peacetime military. -, . An alternative which-can meet the strategic,.t,' requirement of aprofessional standing force, withOutexcessive-ilitary . . -.1 . call-up. ,v.is a national . service schemecoveringcivilian as well ?,. as mil#Aty service. If- 1 And the idea, ofan additional commitment. ,,fx,..' 11,-.0, .., . . .- 'of 'the youth of the nation to the ,eradication'of disease', . poverty and ignorance in Our oWn, societyand.elSewhere Is ex-. - ," . citing and wortbir:. , UnfortUnately the elementof compulsion stilkinvolVed and'for a non-,national.defense requirement, This the System is'a costly means to its prs..iseworthy end. Youth ' compelled to serve will not be uniformly, willing,and enthps- . iastic and, hoWever strongly. committed will notbe approprkately ./ trained, capable and competent for many ofthe tasksrequired. - , Ifthe service is valuable'andimportSnt enoughto merit public . action,*then'better that therqevant trained,' dedicatedand professional personnpl beemploypd and the'scheme fina-nced openly through general taxation: A But these are arguments thSt , . Can, only appear super- ra . . , . a * . ficial, presented so br.iefIy,inladvance of thetext. .It 'is . ; ,.. . . , . . . believed that the framework . . . of the argument to beadvanced.'can .. . , . . be 4 readily extendedto these alternatives. But each of the R= dsibilities is simply' a- variant of a conscriptionsystem and the1 key questionwill be whether I any form of compulsion is 0 necessary in.sitqations'sbort oflsignificant mobilisation; ,i. .' ) In the folloing chapters,we lookfirst at, the question . of t;rhether-the fiscal iMpIiCatiqns of a draft predispqsea deMocracy toward-maintainingconscription in peaCdtime rather . tan turning- to an all-1.NaunteerAO force.- ThiS.'is the s1$ject% .,.. of Chapter 2.,F. i nding,the'adoptionof a drafttiot.d,oregbne .. . - . . conclusion, Chapter 3 fooks ... more closely at .theprocess of . - . , ,.. determination4of ,military manpower needs and 'how personnel . . . - . requirements. will differ under draft and volghteerregimes. The complementarranalys4 of sdpplies°forthadmingunder,'' - alternative regimes-is Put 'forwardin Chapter 4: anda matchr ing.1,41th the demand analysis permits `specification-.ofthe feaiibilZty conditioriz foran all-volunteer force.' . Beyond feasibility'lies desirability,the subject of Chapter:5 which evaluates the procurement alternativesfat this.peace- , *time _situation. The criterion examinedoindetail =-are those to-Which economic' analysis can best contribute:ellocative efficiency, distribution,'flexibility,though a discussioi of further criteriadess well-analysed by economicmethods but essential toa ,balanced view of the issues,in anafysAg this controversialarea, rounds out the study. 5 P 4 Vs, ) %tt." "i ' CHAPTER 2. FISCAL POLITICSAND CONSCRIPTION I Economists setting out.toelucidate-political problem's by wieldingnothing-but their own tools are* likely to stumble: Fortunately theirvery stumbles can turn out to be illuminating. Albert Hirschman., A Bia6 forHope, 1971 re 411. Our primaryconcern in thisstudy .1b . supply be- havior under alternative military manpowerprocilrement systems. Howevei, we do. needto consider military labor' demand insofar as it relates'tothe choice between. the --alternative supply institutionsof,conscription and volun- teerism. In conventional economics the dethandfor labor is analyzed for profit-maximizing, firmsproducing a definable output and operating in,competitive,markets. For, the public good ''defense," demand for labormust relate to anill- defined output produced by 'a'bureaucratic non- matket, organization in,resPonse to'politicallyexpressed demand for the product. Twb phases for analysis of militarymanpower demand can therefore be distingpished: the politicalprocess phase in which collective demand,and funding for defense policied'are determined, and thebureaucratic phase of provid-' ing output to. meet that collectivedemand. We with to° examine these two phasesas they relate to the issue of choice of military Manpowerprocuretent institution. ,%. TO examine the bureaucraticdetermination of military./ manpower requirements we take the collectivechoice of , - , > defense demand and fundingas given, and assume that this is . . not influenced by the choice ofprocurement institution.1 It is then the task of the bureaucracyto establish the 2 military manpower strength appropriateto this demand-- ' and this will be affected by-theprocurement institution. The next chapter is devoted to thisbureaucratic,phase' as it relates to the draft and volunteeralternative.' What.we examine first is the collectivechoite phase, not in the choice of level of defense, but- rather in the choicd'of procurement system itself. Whether a conscription. or volunteer force is adopted is a political,not bureau- cratic, policy decision and economicanalysis has been' employed to outline factors feitoto becrucial to this choice. An Economic Model of Institutional Choice As is analyzed in tail in Chapter 4, conscription is an implicit tax -in -kin imposed as insufficientlycom- pensated labor for servicemen (both volunteerand draftee). which thereby ge.Z-Ates a subsidy to the general(non-service) taxpayer in the form of a-smallegeneralexplicittax levy necessary to fund a given militaryestablishment.. From this fact a number of economistshave .concluded that conscription is frequentlyadopted and maintained ina democratic t.egime because voters willfollow their fiscal in-- terest andsupport an institution, (thedraft), which ease's e the tax burden of the majority.Greene and Newlon, for a 'instance, state that "Certain economic consideratiOns explain why the draft may be preferredby a majority of citizens... We conclude that a major barrier to a volunteer army may be the inability of those who would benefitfrom eliminating a draft to compensate thosewould would lose."3 Galb'rai,th foot has maintainedthat "The draft survives principally as a device by whichwe use compulsion to get certain young men to serve at less tharithemarket rate of pay. We shift the cost of military service from , the well-to- JP do taxpayer who benefits by lowertaxes to.the impecunious youngdraftee."4 The most fully developed presentationlof this argument is that giv-en -by R. D.' Tollison.5 We choose to use theTollison model 'o examine this process of insti- tutional choice. It is to be shown that the economic p& interpreth.tion of the draft is too simplisticandthat igolation of economic factors under ceterisparibus assumptions,' an appr6ach that often serves-well inother AO. r -21- . 4 tcontexts, is inappropriate and misleading. A more complex alternative. model must beadopted. Tollison''S basic assumptionsare; 11\ A political system of direct (referendum)democracy with -a simple majority voting rule and universalsuffrage. 2. The adOptiQn of a4bilitery draft is the only issueto be decided.' 3. Individual.votingis-bsedon pecuniary self-interest (discounted'expected wealth). 4. .Budget savings associated with a draftare recognized,' and not lost throUghinefficiencies engendered.by conscription andare not used to increase public expenditures by equalor greater amount. We have then a model ofpure economic men operating in .a Swiss democacy with full perception of thefiscal ramifications of a draftsystem. Whether or not a draft is adopted by the collectivity thus depends in thissimple (Tollison) model upon the sizeof the militarymanpower demands in relation to totalvoting population and'onthe form of the draft system beingconsidered for adoption. The form of the draftsystem is relevant becausesome systemsmax not permit _advance deteurinationof liability and acceptability for service. For example if a lottery system is proposed the impactof conscription will bethe expected implicit tax effectdiscounted by the probabilityof 6 31 -:/ being drafted. Votingagainthe draft Will thus be used . , .. . . on the size of the group eligiblefor the draft ballot rather than the actual number ofinductees.- - If we do assume prior kilowledge ofservice obligation or'if we treat a lottery draft as the viayle alternativeso that a'constant parametric relationship holds, thenthe I determining factor behindcol'ective choice of:=military manpower procurement institution inthis model is simply the magnitude of military manpower demands. Provided ser-; .vicemen and prospectiveinducteesconstitute less than half of the voting populationa draft will be instituted. On the principle that "bygonesare bygones," veterans will behave as do other general taxpayers and vote- to.supporta ?aft since this isnow to theit fiscal advantagetoO. This analysis, Tollison feels,"lays bare the political elements that upderliea draft system in a democracy... The inference is that something like this choiceprocess explains the existenceand stability of c real world draft systems."6 Il_pecuniaryMindedgroup of- non-military individuals, when theyform a voting majority, is thus seen as enactinga draft system to ease theirtax burden. But it is really a very(largestep from recognizing the distributional implications ofthe draft, and even assessing it as one factor in'votingon the issue,., to claiming that it is for this reasonthat drafts-are adopted 4 32( L-23- and maintained. What the model essehtially, predicts is that where there are more general taxpayers than servicemena draft will be enacted. The basic mechanism is the assumption of pecuniary motivation and the institutional constraintof majority rule. But this is a prediction that is neiper sibstantial or sound. Rarely are there situations where the military is strictly larger than the non-military voting population. Moreover in those situations where the size of the military does become relatively large--as in a citizen soldiersystem along Swiss lines or with mass mobilization- -it seems a -sound general rule that the greater themanpower requirements the more likely a resort to the draft. Indeed it is a second prediction of the model thata draft,will tend more to be adopted for small military establishments and abandoned for large scale military forces., Clearly such a model ' misses much--for while conscription is adopted'inmany countrieseven for relatively small military establishments it is rarely abandoned in times of greater military manpower demand. Similarly it has been the historical experience of each of the countries considered in this study, as outlined in/ Chapter 1, that it is return to smaller militarymanpower . - strengths that has preceded the adoption of all-volunteer forces. This is the opposite of what the simple Tollison -24- model would predict. Another prediction of the model would.bethat it is the military which willoppose conscription and civilians . t who will favor a draft. But here the most thatcan b'e said is that the record is quite mixed. It may be possible, for vk instance, to discern a predominant, biasin favor of the 'draft on the part of theU.S. military establishment since World War II, but the oppositeseems true for the military; ? in Australia, Britain and Canada. The civilian record is equally Mixed with nationalreferenda in Australiacon- 1 sistently rejecting a draft while publicopinion polls in the U.S. show a steady Majority favoringconscription. Canadian public opinionpolls have, at different times, found both majority support and oppositionto compulsory 8 .military service. A simple causative explanation ofconscription in terms of majority fiscal exploitation ofa minority-seems ruled out. The problem is much more cbmpl,ex and theattempted 4 generalization is unsuccessful. We review the model's sum- ... plifications to find thereasonor predictive inadequacy and we suggest an alternative model/. Political Environment and-Voter Motivation Part of the Tollison model's lack of success could come from the model's assumptions.as to pdlitical environ- . meni. Modification of 'the assumptions ofuniversal suffrage, 4 ,-25 - direct democracy, simple majorityrule, single_issue con-42 ry t cern and true pdrception of fiscal interestscould all alter thepredictions of the model. Thus young ,men of draft age or facing the draft in the near futuremay be voteless, 4 so altering the voting balance there. The representation process and length of electibn periodcan produce divergence betWeencitizehs' preferences and politicians' decisions.9 Multi-issue elections can permitcoalition formation, so that an'enfranchised draft-agegroup feeling very strongly' about conscription may facea non-intense majority., sufficient elements of which:maybe willing to tradea vote against conscription for supporton another issue.10 Another possibility is that votersmay not fully recognize. the tax implications of the institutionalchoice since the conscription tax is an implicit tax-in-kind. But it can be shown that it isnot the political environment assumptions that,.are the basicproblem. We can show this in an empirical manner becausewe do have some political situations which conform to thesimple political environment postulated In themodel and yet the predictions of the model are not confirmed. With the exception of the suffrage element.one example of ich a' system is the Swiss system of continuing publicreferenda. Even more applicable is theAustralian referenda experience of 1916-17. 4 Facing a. need for reinforc?Tnents for its voluntedr .1 divisions in Europe but being blocked from enactingcon-. scriptiOn.legislatidn'in Parliament bya hostile Upper House, the Australian Government choie to putethe question , of conscription to theelectorate ina referendum in October , 4' I 1916.. This direct appeal for powers of compulsionwas, . . . . , defeated. A second attempt to gain those powers by referen- ':dum, in December 1917, was also defeated. S. The experience is important for our purposes because L. the conscription proposal's related to men aged 18to 35--. not just disenfranchised young men, theywere voted on by direct referenda employing a simple majority votingrule,11 and the conscription issue was 'the only issue put to the electorate in the referenda. The size of the 'anticipated. call-up was made clear to the electorate and meant,even r allowing for those in a potentially draft-vulnerable status as opposed to actual numbers to be called, that the vast" maiority'of.voters knew they could not, be conscripted.Yet . the civilian majority voted against the draft and a separate count of service votes shoAied that a military Aajority voted for the draft. This voting pattern is the exact re- verse of that predicted by the Tollison,model and the di- vergence clearly cannot be accounted forloy the political simplifications of .the model. The-diffic4ty then must lie with the remaining simpli-, fication of the model viz. the assumption lof voting based,on . ; --- 4 w , O pecuniary self-intprest. We question the validity Anduse- --, ... .. _ fulness of this assumption here andwe propose instead an alternatixieconcetltion tif voter behavidk,incorporating non-pecuniary variables And recognizing that theinterest yr, of others figures prominentlyn the utilitycalculations of many individuals. I The need for such aztalternative approach iscrucial for conscription because it should be cleatthat the draft is, not just another tax.,. It is compelled labor wherean individual is relquired to turn from his normal pursuits,'to adopt a military life with all its disciplinesand dangers. Certainly compulsion is involved in other taxestoo., But compulsory military service.is cruciallydifferent in that here the state requires not just subj1Ctia . but servitude and, Unlike..the minor fellow exception of juryservice, it requires a major servitude involving a large commitmentof T* oneself, and the possibility of killing and being killedin '% -the name of one'scountry. It is not surpriGing that,deecisions about.tlie adoption of.such an .institution should involve a wholerange of factoxs. Voting ci the issues thus derives froma cOmplex. of motives rang n4 from solicitude ("I dorrt wantmy son to get killed.. "). /o retribution ("I had.:to do.it, so should you."); and fz m paternalism ( "It,will make aman out of you.") through pacifism ("ThdU shalt not,., learn to'kill"),.. , 11,), . _ to patriotism ("Your country right or wrong"). The scope here for important non-pecliniary variables to influence . voting is clear and the role of, interdependent utilities may, , well become pre-eminent for many in influencing decisions on conscription. Such traumatic historical episodes as the New York draft riots of 1863,-the AuStralian conscription ple13escites of 19167-17and the conscription crisis in Cangda in 19l7,:7 1942, and"1944, all indicate an importance attaahedto,this' issue that is rare for. purely fiscal considerations. It is apparent that any mono-causal explanation of conscription is bound to be superficial at best and incorrect at, worst : a'point that might seem obvious were it not for the growing ,literature on the draft in economics whiCh seems content to propose ungualifitd theories of fisCal exploitation in this field.. The assumption of pecuniary motivation is, of course, 'convenignal,in,bconomic analysisand fundamental to deductive t 1 economics. If individuals act inan erratic fashion, only statistical methods will serve-to discover laws of human 12 action. But with assumption of predictable behavior we.face two problems. One is 'that our motivation assumptions must be operational--capable of independent verification.Too - many writings use postulates of utility maximization that are simply tautological, useful as a framework fororganizing s 'thoughts but not productive , of testable scientificpre- dictions. By assuming wealth maximizationin the collective choice model a quite operationalassumption was made and' predictions from, the model could be derived Atdtested, , both in principle.and fact,against evidence. a. Making, `such a, specificassumption of:motivation brings,the investigator.face.toface with the second' problem;' even if individuals aqtzin a-purposiveway tliey may do so ,from a large number of ,complicatedmotives. Modelbuilding ,- may still-proceed if it istthought that.a,basid or most common-oe a Significantmotive,,Can bt isolatedand examined for its effects: But it must beestablished and-not merely A asserted or assumed, that themotivation chosen has-indeed, the importance claimed. This may be'shown by direct testing -bf motivation,say'through experimentalor survey ry methods, or by testing the predictiOns of the modelemploying t, . . -the assumptipn, and attemptingto allow for the separate ,effects on prediction of the otherimportant simplifications of the Model. . . .. , The latter course is the one that we have been implicit= . ly following in this chapter. The conOlusion reached is that a number of basic'predictipns of the modelare not confirmed and that, while more complicatedassumptionsas to the political environment can prOvide'reasonsfor divdrge t predictions, the model as still notverified even'in . , -36- circumstances where the simplifications of"politicalenifiran-, ment are appropriate .and accurate.-Interdependent utilities 4 and important non-economic variableiinfluencing behavior A in voting on this issueare said to be the major cause of 6 these deficiencies. Further Empirical Evidence Further tvidence_of this .is. providedby the available poll dataon the: draft. For ..Britain a search of Roper . - , Survey Researc h Center computerized-recbrdsfound no questions asked on conscriptionby any major survey organiza- tion since thefile cotmeficement date of1966. ?Or Canada. the first timea question was asked on compuls9rY military service since 1956 was on September.. 7, 1974:As indicated, . earlier, more of the sample opposed thanTavored consCrip- tion. The available breakdown ofthe Canadiansurvey data is , . by age and education and the dttails aregiven in.Table 2:1. The age-related pattern of opinion doesconform to -what would be expected from the Tollison,model. The older age groups ; ..4 . . . k are more strongly in favor of .a-draft, and since income(and . If hence economic gain froma-draft) increases with age,.this- , result is compatible with a,pecuniarY- self- interestmotiva- tion. But so. are other explanations compatible withthis jv age pattern, for,exampae:ypaternalistic desire to?.e the r. T . 0 . -31- 4 4 military as a vehicle for thepersonal 'improvement oftoday's youth, (ptoviding theMwithtesponsibflity, discipline, patriotism 'and physical strength) mould equallyexplain t result. Moreover.the,education-opinionrelationShip the opposite to what,the correlation of...income and'education would imply for a vote basedon fiscal interest. We note though that the-qiiestionasked deals withaproipsal'for - universal military training,so that opinidns may reflect differencesrof view on the,needfor that level of military- . 4 manpower rather than the methodof procurement. For the .United States, the only'GallupPall dealing directly with this` ubjeEtwas conducted on DecgOer ".18. S The availabke cross-classificationis by age and is given as Table 2.2. 'Unlikethe Canadian case, more respande ts supported the draftt were opposed Wand support was grea et among the young, who wouldsuffer the greats 4 -I" pecuniary loss under a 'draft. Neither the Canadiannor U.S: -poll evidence then sitswell with the Tollison tSrpe .model of draft adoptIon., Poll data though is subjectto the usual reservati as tO whether people say what theybelieve or do what they Aay. The sample size is also limitedfor analyzing specific population characteristics. More direct evidenaon this )e issue aan be,sought in the votingrecords fox the 1917 conscription referendum in Australia. The CirctmStances of t. 732-' TABLE. 2.1. OPINION 'ON CONSCRIPTION, CANADA,1974 FavOr Oppose, No' ,,Deaft Draft Opinion 822.: 18 to 291rears 24 68 8 30 to 49. years 45 46 9 in .50 years and over 58 31 . 11 Education: Elementary., 55 29 16 High School. 42' 450 8 r University 26 .68 , 6 Total. (I4=1071) 44 46 10 Question: "Would you favor, oroppose, requiring.each able-bodied young man in this..country,when he reaches the age of 18, to spend'one-yearin military training arid 45 then join the reserve or militia ?'" Source: 'Canadian Institute of Public Opinion,The Gallup Report, September 7, 1974. ""/ this referendum were discussed above,and it will be recalled Pa% .2_ that a majority voted against conscription. For this erendum,we have detailed votingdata, though not for the 1916 referendum, and we can, relate thisto data from the 1911 Census. 1921 Census Reports were unobtainablefrom U.S. sources. , . . Since federal electoral districts andcensus districts did not havecommon boundaries,we are obliged to restrict analysis to thq smallestcommonunit available viz. metropolitan I -33- TABLE 2.2. OPINION ON CONSCRIPTION, UNITED STATES,1968 Favor Oppose No Draft Draft Opinion Age: 20 to 29 years 71 26 3 30 to: 39 years 0 69 25 6 40 to.49 years 62 35 3 50 year and over 55' 36 9 Total (N=1460) 62 32 . 6 , Question: "After the Vietnam War isover, do you think the United States shoulddo away with the draft and depend , upon a professional military force madeup of volunteers, or do you think the draft should becontinued?" Source: Roper Public Opinion ResearchCenter, Williams College, Massachusetts, unpublishedtabulation, 1974. From American Institute ofPublic opinion (Gallup Poll); #773,December 30, 1968 A and non-metropolitan sub-divisionof each state. The Sc3Cio' economic characteristicsavailable on this basiswere age, sex, leligion, country of birth, industryand occupation, educatiori. 'The latterreferrefd only to literacy andso was' not used. A measure of the numbers from' each region who - were serving overseas in:the armed forcesalso/ was obtain- able from the voting return figures. Ordinary Lust Squares I4.near'regressions were applied to the 12 'regions using the variablesindicated. The results'- are given in Table 2.3. The inclusioniofvariableshad to Be governed by their availability Mather than A a priori theory,/ .. o I. . ' TABLE 2.3. THE AUSTRALIAN CONSCRIPTIONREFERENDU4 OF 1917: CROSS SECTION REGRESSION ANALYSIS . . ? Variable Coefficient . .- (mean value) (t statistic) . Equation:1 -Equation 2 Equation 3 Dependent Variable VOT1 1 1 , VOT VOT (0.4647) ,.- Military Age2 0.0111 -0.0105 . 0.5397) (0.056) (-0.059) 2 F ale 3.0 2.812 , 2.827 (0.500) ( . 38) (4.363) (5.152)*- 3 Roman -Catholib -0.3391 -0.2771 - 0.2747 ' (0.1923) . (-1.007) (-1.0064 (-1.088) : 3 Born Overseas . 0.1528- (0.1802) (0.393) . . Rural Occupations . (Males) 3 0.5626 0.5092 0,.5102 . (0.3151) ... (3.149) (4.732) (5.176) Armed Forces . .0verseas2 9.130 9.3778 9.362 (0.517) (7,480) (9.678). (10.856) Constant -1.683 -1.526 -1.539 , (- 2.68'3) (-3.407) (-4.268) R2 L .- .9505 .9489 . . p9489 N 12 12 12 °. . 1. VOT = Proportion voting in favor of conscription.' 2. Variable as a proportion ofregional voting'pOpulation. 3. Variable as a proportion of regional total. population. Data .Sources: Commonwealth of Australia,Parliamentary Papers, (General), Session191718-19, Vol. IV, pp. 1461-1589. Commbnwealth Statistician,Census of =the 1Commonwealth of Australia,1911, Vols. I and II. 4 dLL -35 -. but the variables lend themselvesto natural interpretation. A quite high coefficientof determination forcross- section analysis Was obtained, indicating thataround 95% of the voting pattern could be "explained" by theindependent variables included. The proportion of- foreignborn and the proportion of the voting popdlationof military age did not contribuie, significantly to explanation. The latter .result is important because in Tollisontgown model age is-often used-as a prdxy for fiscalposition on the draft'issue. The assumption 'is, withGalbraith, that older well-to -do taxpayers vote to extract sg4sidiesfrom the impecunious young draftee. This behavioral assumption isnot porn out by ...q! Australianda;\ The variables contributingto explanation of thecon- scription vote are the largelynon-wealth correlated variables of: proportioh of women, males in ruraloccupations, the regional contributionto Australian forCesoverseas and' the-proportion of Catholics. The former three. variables contribute to a vbte for conscri d the Catholic variable-contributes to a vote ainst conscription. The -constant. term is negative. The befficient estimatesare fairlybstable in relationto the issionof the age and birth-place variables. The pattern of explanation'thatemerges conforms to the accepted literacythistorians'interpretationof the conscrip- 13 tion plebescites. The historians have emphasizedthe Irish Catholic contributionto the draft debate,.where Australian conscriptionwas seen as a tool'for use in British trade wars and forexerting imperial control, including over Ireland. They have also particularly . , emphasized the labor opposition'to conscriptionwhichwas seen as paving the'wayfor industrial conscriptionor at leaSt for greaterwage controls; andj01here reflected as the inverse-o4)theproportiof men in ruraloccupations. The female.vote was also emphasizedbut was not so prel-' dictable a priori, since bothpro and ati-conScriptionists made strong appeals towomen voSers. Women were assailed with warnings'that "themoreminyou send the more will be killed!!! Do you want the furnace ofwar to consume all your fathers, husbands, and brothers?... Vote NO'," or they were entreated to "for the sake of themothers of Soldier- "14 : sons, vote Yes.- In the event, women votedmore than propfttionately in favor of conscriptia..The other major explanatory factor isolatedwas the contribution of each region to Australian volunteerctroopsoverseas. This was a,positive influence in votingfor conscription, presumably in the belief that conscriptionwouldbetter reinforce and protect the soldiers already lverseas. /hose: soldiers themselves voted, ina separate tally, in; favoraconscrip- tion. It is cleat that those' variableswhidh contribute , -37- significantty to explaining the1917 conscription referendum vote in Australia_ are variablesreflecting characteristics 41 such.as'sex, religion, andsocial class whichare little relited to pecuniaryself-interest considerations and which - strongly reflect interdetrendentutility factors--religious and clasd solidarity,maternal and wifely concern. Pecuniar.y motives,even when isolated ina mul variate analysis, do notseem to contribute'signific tly to explanation. Moreover even if fiscal self- interest were sh9wn to be important it must be recognised thato isolate that motivation under ceterisparibus assumptions,as we can do with price effects on the choice between-apples andnuts, is inappropriate to thiscase of choice between institutions. The price effects. ofa draft inherently.represent an institutional change that has crucialnon-priceimplic- ations in the minds of manypeople. .Adoption of conscription not only alters the structureof tax liabilities butat the very same time and by the verysame act affects stronglya range of political, social and philosophicalbeliefs and interests. A.tax-price change here representsnot just an in- centive to change the amountdemanded of a commodity under given institutional arrangements4.Thetax-price_change reflects the very institutionalchange itself- something 6.7 -38- for which,' in this area,we ,cannot simply assume a single given set-of tastes for the associatedcommodity. The itIlitution of provision of the commodity isitself a matter of pref- . ,erences here. To isolate a pecuniary effectand to raise it to the level of sole causation,claiming it "explains the political origin and stabilityof the draft"15 iswrong- headed. CHAPTER 3. MANPOWER REQUIREMENTS UNDERALTERNATIVE PROCUREMENT-SYSTEMS Qui desideratpacem, praeparet bellum- Let him who desireslpeace,prepare for war. Vegetus, Dere mil. 3, Prologue (circa' 350 A.D.) - It follows from the analysisof the collective choice of procurement system inthe previous 'chapterthat a draft to man a peacetime standingsarmy is not a foregone conclusion in a democratic regime, in spite of pecuniaryadvantages to general taxpayers who forma majority of voters. Many . issues, economic andnon - economic, will influencedecisions. Feasibility and desirabilityof a volunteer forcearethus subjects stillworthy of investigation. To examine feasibilitywe must define.the. military manpower requirements necessary to meetdefense needs in peacetime, and thenassess the conditions under whichthe altrnative procurement institutionscan produce the manpower _supply to meettheseneeds.. The remaining task on the demandside is thereforea specification of militarymanpower requirement*s.'- To do this .;: we take the general level of demand fordefenseservices as exogenously given to us 'y the politicalprocess, and consider only the-translationof demand for defense into personnel requirements. Zig 0 Defense Manpower Planning' The determination of how thdgeneral level of defense' output is to be provided is theresponsibility of thebureau- cracy that organizes the production of defenteservices. I It. will be recalled that defenseis a public good 'and hende.represehts marketfailure. It is a gbod for which 4 the co-ordinating function ofthe market fails tooperate since its production and distributionare not amenable to .response, to money flows and. prices inmarkets. The alternative allocationmechanism to exchanges in the market is that of "commancr!which refers toresource allocation in physical terms viaadministrative orders. The command system isa bureaucratic onewithcues coming not from the market but fromdirectivet in a hierarchic structure,. Allocatidh thus becomsa matter of planning, Whether implicitly or explicitly, and it is within this sort Vt of environment that militarymanpower requirements are -2 determined as part of theprocess of deciding upon the allo- . cation of resources to meetinga collective derland for "defense." The elements,that enter into defense manpower analytis . are outlined schemAically in Figure 3.1. The diagram con- centrates on flows rather than stocks andso is best inter- preted in terms ofan ongoing planning operation. The figuie illustratesa basic parallel demand and supply planning sequence and matchingprocess that would be Collective Demand for 4 Defense 4- Operational -Characteristics Organization of Existing Objectives Personnel External (Military Factors, .External Effectiveness) (Labor Factors Market (Technological Conditions) Change, Non- Technical Retention .Labor Costs) Production Probabilit Possibilities Matrix (Including Organizational) 1 Manning Internal Requirements Labor Forecasts -Supply (Levels and Forecasts Mikes over Time) Manning 4111.-.. Discrepencies Ekternal I , - Labor Suppl Costs of Policy Forecasts Policy AdjustMents Adjustments Recruiting (Including 41-Training AlloWance for Morale Transfer and Promotion J. Productivity Redundancies 1. Effects) FIGURE3.1: DEFENSE MANPOWERPLANNING -42- a bureaucratic equivalent of the automatic operation of those supply ana demand forces in the market. A formal way of analysing the planningprocess and' improving decision-making would be to formulatethis man- . power systei as a:proigramming model. The standard. approach here wou d be to develop in detail what is the-supplyside A' of the sc ema in Figure 3.1, by elaborating theinternal labOr supply component to show thestructure of manning according to such characteristicsas rank, length of service and military Oscational-specialty, andto show how aggie- . gates of people in these various:pategOries flowat various. =rates and various costs through the system.The programming element would then examine the alternative manpowercosts of different policy regimes to specifya set of policies , 'which could manipulate the flowsso as to meet an official ement of personnel requirements at minimummanpower cost.1 The are difficulties with suchan approach. To begln. with, informational requirements for the analysisare substan- tial. Cost formulations are especially difficult to obtain, particularly for such significant indirect costs as produc- , tivity and morale effects. But more important than that is, the fact that manpower requirement ,quotas are takenas given. We must ask whether a statement of personnel reqdire- wf . ments is to be accepted at face valtie. Should not our objec- ' tive be to select policy options which will enablespecified Output goals to be.provided on a sustained basisat minimum t -43=7 production costs, rather than policies which meet specified -manpower goals at minimum manpower cost? Where meetingofficial peisonnellrequirements at minimum cost is the stated objective formanpower planning those requirements operate as constraints- in -a .programming- analysis. This observation immediately suggestsone way to evaluate the consequences of imposing such requirements. We simply examine the shadow prices-of the manning constraints generated in their solution and so make explicit,the cost saving which would be obtained if the manningconstraints / were (marginally) relaxed. chonscious.decisions ban then be made as to whether the costs are worth paying. As Robert 4 Dorfman has suggested, shadow pricescan be used in this way, to elicit true. preferences of policy makers.2 The imposition of rigid personnel requiiements implies a rather drastic assumption as to the trade-off between personnel add costs: ?ero for-overmanning and infinite for undermanning; and equally for the trade-off between differ- . ent inputs: no substitution is possible. . Such drastic assumptions st-toubd be investigated. It is evident that-,frequently significant substitutionpossi- , bilities will exist. the broadest level we could:con- . sider substitution in international alliances- -for instance the suggestion of "a more stringent division of laboramong 1.4 .. -44- NATO countries eliminating the need for each alliance,meMber to maintain all. three services."3 Similarly,' within a 4 , national defense establishment, although the several service . ar,o,generillyassigned Efferent missions', manyof the' F activities-perf -d by one servicecan substitute for 0 . - , those performed bynother service. An increase iin fire- riower,,for example, cabe achie /ed by increasing either . . the size of the Air Force (tatticai air support),Army. (ground support) or Navy (sea or air support). Next, wit1;in each service capita171abor substitution can be examined, both as to weapons systems and in- service O support areas. For example, the-, Australian experience in Vietnam was 'that to be able tooperate within range of- . 4 artillery reduced the number of meh.required to withstand *I * equivalent attack without artillery back-up by about one- 4 third. In the maintenanpe area an alternative to repair by 'skilled tradesmen is to increase inventCris ofspa parts.* Finally there are substitution possibilities betweeill0 different types of capital (e.g. gas turbines,vs. steam engines) or between different types'of labor (e.g. doctors ' riedics) 'tuCh substitution opportunitiescan be made :quite indirect and subtle, operating througha process,.of Marginal'readjust%ent.and redefining of .tasks, saY.along'a. process line, butultimately leading to a substitution for say,, raw recruits and experieiiOed sergeants even though . there'i no man.fOr man replacement between them. -45- o ')/ NW) 7 1'. To incorporate full recognitionof thede substitution , . - sib . . . possibirities into planningthough is no eaby, task. . In the . - %. . economic anlysis of production bya pi.ofit maximising firm, optimal input combination readily specified: We use a production function (isbquantset)' to summarise prOduction possibilities: 1 V f(Kii11%, Lig*. ) a (3.1) .th where Ki. is the, I. , type of capital ;`(ii = 1,...,n) , . is the ith type of labor,(i,= 1,...,r) Q is the output parameter. ft If Q is fixed we obtain the equation of,one,i4pdquant-of the system, showing the alternative input combinations which . can produce the fixed level ofoutput Q. -Minimum cost for * , producing a fixed level bfoutput Q is :obtained whenthe . . , . . ',. last. dollar spent onany input add's to output.the . . same-amount, ',-- -...... - v . ... 'as, it would. ifspent-on'any alternativeintbut. But foi"ptivate..firms O the motive profit maximisa- . ^::r. tion or'thespur. of competitionensures same approximation' \, tp ;these optimal input combinationconditions. 'The whole 14. % militarymanpower planning discussion arisesbeCausethesp elements are lackingfor the prodgptionOf defense. ,W$even have aiffiCulty for defepsein'aicribingmeaning to:the product itself, and hence to the conceptiofa "military e ;1111 c. /. -46- . production function." Whatis the output measure for-national defense? ./ We lack for defensea clear-cut'objective function, and hence cannot consider any'over-all directoptimisation criterion. Objectives become instead defined incrementally through a learning process, and problemsare best thought of in terms of their components, with total solutiononly emerging ag an aggregate of partial.solutions. It is sug- . gested that in the fabe of uncertainand changing overall I objectives suboptimisaiion is the appropriateapproach to bureaucratic resource allocation.5 For sub- optimisation we can conceive of defenseas being Composed of various military missions. This can be represented as: Q = f(M M2,..., M ) 1, 2' ' n where Q national"defense .th Miis'the military mission (i = gach of these missions can ,tself bethoughtofas a function, of the capital and labor in that mission: t M. = g.(K.,L.) (i = 1/...,n) . (3.3) where Ki is the vector of capital inputs used in the.itsmission L. is'the vector of labor inputs used in the mission. NG of -47- 1 s In this representation, national defense-comprises An output for each separate mission,and each mission output is a ponstraint for determinationof the least7cost combinaT tion of inputs required to achieve that-Mission. The mis- sion outputS themselvesare "inputs into a higherlevel of central decision--;making, butare the operationalmeaning of national defen6e. Actual application Of the kiboptimisationapproach is not an easy task.6 Implementation through decentraliza- .0 tion, for instance,runs into conflicts of objectives between higher and ldwer authorities andproduces a need for controls such as vetoes, constraints, incentivesand so forth, which. can hold conflicts within tolerable limits. There is also .the task of ensuring-that the appropriatelevel of decomposi.* tion of the problem has in factbeenattained. The essential condition is1 that disaggregation besuch that the marginal rate of substitution between inputswithin a mission are independent of the values o'finpUtsoutside that mission. If that condition is not met thenimportant interdependencies remain, and suboptimisationruns the risk of ignorim; potehtially significant substitutionsbetween missions. Devices for dealing with these interdeDendeficiesmust be invented, such as well-designed committeesystems to deal with common inputs, or recursive optimisationwhere ocera- ti.ons are performed sequentially. ti- ti -48.- A third reqUiiement is that the mission output itself must be well-defined. This may mean measurability 4 as with, say, amounts of bomb damage to an enemy industrial production capacity or probabilities of vessel detection inanti- submarine * surveillance. But operationality is possible without direct cardinal measurement of output. _For many, purposes simple F". ordinal comparisons of the effects of different . input com- binations will be adequate. To be'able to assess whether military effectiveness is made "greater," "less,"or "the _/ same" will often suffice. In our area of interest this ordinal techriiquemight mean that we could take an official personnel requirements statement and treat it as,a point through whiChwe wish to pass an indifference surface (isoquant) showing whattrade- off can be made between different factors whileleaving the level of military effectiveness associated withthe require- ments statement unchanged. Such an indifference surface could then replace a personnel requirementsstatement as a constraint'in a manning optimisation problem,and cost could now be minimised subject to this more' satisfactory constraint. Prdkriously, manning was segmented off and treatedas a suboptimisation problem within the personnel requirements quota constraint. In fact it seems that this initial approach . _ represented inappropriate disaggregationsince it implicitly 4, -49- ignored the very important substitutionspossible between L factors. The planning process for manning is reallybetter seen'as one of selecting policy optionsthat will-enable: each:specified military.output(effectiveness) goal to be met efficiently at minimum allocationcost. Of,course effectiveness;is stilla ctnstraintandvas such, if taken literally, impliesno trade-off between effectiveness and cost. Cost sensitivity is likely to be relatively smaller for an effectiveness constraintthan a personnel requirements constraint, sincethe former does consider more substitution possibilities. But due care should still be taken, say through shadowprice calculations, that this trade-off between cost andeffectiveness' has been recognized, and thatthe level imposedreflects a "true preference" of the policy maker. Alternative Recruitment Systems C01" 441%t It will not be our' task here to investigateoptimum input allocation for military missionsand so derive .efficient total demand specificationfor inputs. Rather we take the planning process and planning institutionsas given--whether optimal or not--and lookonly'at one support activity which is not mission specific orrather can be considered a separate program viz. recruitment. For analytic purposes recruitment may be regarded as the primaryelement in a sequence for which suboptimisationcan be performed recursively. MI* -50- This perspective means we explicitly neglecta whole range of factor subStitutione of potential importance,to av the manpower demand question. Much discussion has been , 4 devoted to such issues as the possibilitids for iubstitu- --.. -' tion of women for men, reserves for_ieguiars and civilians for military sersonnel. IC1. 1 . 1 . , . loop .1 a ,t I t.ti. I. i If .4. 7 = 1 , . 2.':icc'x'-'v, + . i ..Tat` i . / . , = :, ,,,, Many of these areas of possible salt.1. do, undoubtedly provide scope for reducing military enlistment requirements; though we should wish to employ suchoppor- e tunities only. if it is economically effici4ht to doso or . if there is a compelling noneconomic reason e.g. equal Jr - rights for women iriclud1h4 the right to participate fully and equally in military service. The international perspec- --/ tive does raise some interesting questions as to substitu? tion possibilities when one observes the different patterns of relative female, civilian, reserve, officer and capital' usage indicated in Table 3.1. These patterns are only sug- gestive of a need for further investigations however since it is clear that international differences in definitions, objectives, technology, factor costs and output levels will explain a significant part trflthe divergence.7 But whether opportunities for gainful inter-alliance, inter-service or inter-factor substitutions exist will not be considered here except if such opportunities are influenced by choice of recruitment system. O CO v , J -51- TABLE 3.1 INTERNATIONAL FORCE,STRUCTURE DIFFERENCES (Proportions of total strength, 1966-1973) UNITEDSTATES BRITAIN CANADA 'AUSTRALIA DefenseArmyDefenseArmyDefenseDefenseArmy Officers . .12 .11 .13 .11 .15 3 13 if -t, ., .1r;4 . 9 t - r ti. 1.I i it i Si. bri .4 Reserves 1.07' 1.25 1.14 1.99 .28 .45 1.77 00 4,1 Women .01 .01 .04 .03 na. .04 .03 Civilians -.44 .42 .76 .53 .48 .59 .24 Rejections* .69 .64 .60 .54 .73' .72 .59 (*proportion of applicants for enlistment) Sources: United States: Department of Defense, SelectedManpower Statistics; Britain: Statement on Defence EstiMates, Presentedto Parliament by. the Secretary of State for Defence;. Canada: international Institute for Strategic,Studies, The Military Balance; Australia; Department of Defence, Defence Report; Also unpUblished data from Defense Department in'each country. -52- We put aside for later discussion in Chapter 5, the possible allocative effects associated with the differing a, price signals imparted by alternative procurement systems. There is an interdependence here, extending from recruitment activities to allocation in other missions, but itdoes not affect the marginal rate of substitution between inputs. It 4' t 4ti ' lIt I 1 . # 1.4 as e itea affects- instead the; factor -price ratio employed in relation. to marginal rates of substitution in optimal decision-making. The point for our immediate purposes is that this isa matter that could be corrected by appropriate central specification of the shadow price that is to be used for suboptimisatiqn with military labor in other missions. Within these delimitations wenow wish to examine how the alternative recruitment systepS of draftvs. voluntary enlistment influence military Manpower requirements, Two types of effect can be discerned. One is the dif- ference between the procurement sygtems as regards their turnover experience and the different levels of accessions that this implies. This is a quantity impact upon numbers of recruits required. The second type of effect is the quality impact--the effect of procurement systemsupon the military productivity of the personnel inthe associated, forces. Differences in Accession Levels. We first examine the quantity aspect. We'are "thus . concerned only withthe number .of personAel contributing t r C2 -537- in turn required by them. 9 We can represent this effectas : 1 1 00 S = pS + pkS + R (3.4) R 1 - 01+k) (3.g) where S 1s the total enlisted strength ..10* IF .4 R is the operatioharforce strength m is the average period of service (1 = 1 is the loss rate) p is the training perpd k is the ratio oftraining7associated personnel to trainees. Reducing the loss ratemeans that the total number of.enlisted men can be reduced while keeping the operationalforce strength constant. Making the caldulation of trainingand support strength savings due td use of volunteerprocurement gives the alla Rm. volunteer force-strengtheqdivalent to, the specifiedwith-draft force strength. Applying the respective lossrates to those strengths gives the alternaivesteady-state accession require- ments corresponding to given level-of effectivenessunder alternative procurement systems. We can summarise this process ofdetermination of quantitative personnel requirementsunder the different recruiting systems as follows, forprocurement system i and time period -54- to combat capability, not the quality of that contribution. The effectiveness criterion,in this limited sense, is the ability to,field and sustain in operations.a given-size combat force. To determine ,the effect of alternative pro- s curement systems here our tasks,to take the official statement of personnel requirements underthe prevailing procurement system as given, and to estimate what the personnel requirements would need to be under the alternative procurement system to produce the same level of implied ef- fectiveness. Differences in personnel requirements in terms of ,accessions will arise from two sources: a volunteer force Will reduce accession needs directly through thelonger service of volunteers, and-it will also.doso indirectly through the reduction in training and support strength thereby facilitated. The lower turnover of a volunteer force results from the career orientation of volunteers,as opposed to single term conscripts. The difference in loss experience can be'summarized by a table showing the probability of remaining on active duty after n years of service. Table 3.2 presents such retention profiles for the U.S. and Australia,. The extremely small number of draftees who choose to remain in service after two years is reflected in the comparison between volunteer only and total force- retention patterns. v17:4 TABLE- RETENTION:PROFILESFOR MALE ARMY ENLISTEES, AUSTRALIA AND UNITED STATES ; --(Proportion on active duty after n years) AUSTRALIA? -sTATkel A t .. a. I Years of Service,.n. Volunteers Only' 'Total-Force Volunteers Only Total Force , 1. .. ,.. it . P. 1.600 < 1.000 1.0004 1.000 1 . ..952 .947 . .900 . .900 2 . .916 .258 . -829 . .443 3 .670 .181° :174 . . .087 4 .640 .173 .165 .083 5 ;' .617 .167' .156 6 '`' .-,389 .105 .130.. --..7.g6::: 11";-- '7 0.70 .100. .124 062 8 . .354 .12.0 -. .060 9 .311 ;009864 1097- .049' 10 ' .295 .080- .094 ,. S. -*.047 11 ..-251 .068 ',091 046 12 , .226 . .061 _ .086 .Q43 13 : :210 .057 . .084 .042 . ,' 14 ,197 .053 .081 .041 15 . .175 .047 -:. , 0t .040 16 .157 042., .077 - .039 . 17 ':- -:150. .041 .075 , .038 18 .1'0.- .038 '.073 . .Q37 19 .128 .035 -.- '.071 .036. .. 20 .116 :031 P. .069 035 .. .., .- S, all years 8.957 3.513.851 % 4.867_ 3.458 . .1. Based on retention experience ofmid 1960's. 2. Based'on retention experience of late 1950's. . Sources: Australia: unpublished data, Directorate of Manning, Army Headquarters, Canberra; United States: Walter Y. 0i, "The Cost and Implications ofan All - Volunteer Force," in SolTax, (ed.) The Draft: A Handboik of Facts and Alternatives, Chicago: The University of Chicago Press, 1967,p. 230. . , 4 -56- he tables are based on specified conditionsof service and while experience indicatesthat "wastage" between re-enlistment points is fairlyconstantt the rates atthe re-enligtment points themselvesare likely to vary . . ,according to the conditions' of servicespecified. Retention 4 ' ,profiles baset' on other 'conditionsof service 'can be con- structed by adjusting the alternative-resultantre-enliistment , . . ', *.rates at-the appropridte 'key points. '4 46-etention prdfilesprovide a convenient basis for determining over-all loss experience. The sum of the retention obabilities gives the force strength that'could be susta d by a one man input perannum. .This is the ,4tt integral under thesretention profile,and the loss rate 'for a stable-force is thus simply thereciptocal of the -sum:, For the re:tentioh.experience specified inTable 3.2 the iMplied loss rates are as given in Table3.3. r, 'TABLE-3.3 ,''LOSSRATES FOR GIVEN RETENTION'PROFILES.. (peTcentages) . 'Agttraliae United States Volunteers Orily .- 1.2. 20:5 . . . nt Total Forcd , 26.0 . 28.9 i ) , Source:- Table 3.1. , S. Cg, -57- , - , ., It is apparent from Table 3.3 that the accessions neededto replace losses from strength willbe considerably-less under a volunteer system than for a mixed - force. which useda draft. 4 Two elaborations of this statement are .in order. The .first is that since, the retention profile for militaryservice is typically non-exponential, due to the fixedterm' of service in military'employment,'the loss ratesare strictly only valid -for a,steady state situation..E3_ In practice accession reauire- ' ments, will vary from year to year even fora given total force size, due to varying external factors affectinglosses and:also with the influence of previbuspatterns of accessions, 4 At _ The second point is that the volgnteer loss rate figuresin, Table 3.3. overstate the loss rate fot a non-draftsituation, becausetleyinclude the lower retention experience of draft- , . inducedvLunteeisand-do not incorpOrate the effect_iif the improved cOnditiOns of service that would "be associatedyith a fully tiolunteer force. We examine thisbelai. We can turn now to the indirect 'source of difference in quantitative personnel requirements betweena draft and 4 d volunteer system..It .follows directly from the lower. 6 -turnover experience of a.volunteei: force,. This lower turn- over will itself reduce the support'strength required for a given operational capability, because lower accessions reduce the size of the necessary stock of trainees,,trainers and transients and the supply and adininistrative elements Ait= L + (S.' - Sit -1) it (3.6). *t where Ait is accessions Lit is losses, . Sit.is enlisted strength In the steady state Sit,= S. , so that: . : Ai = Litt (3.7), = S. 1 it (3.8) where Q.is the loss rate. 1 For the two alternative, dbcurementsystems ,of draft-1D.) and volunteer (V), we ihu ave accessions given- by: I 'ADt = 2'D Sbt (3.9) AVt= QV (1 -c') SDt (3.10) I ° where a is .the change in the operational Sc. :, force atio, R . The,value of S he given force strength under Dt a - draft system, and thekey parameters,to be estimated to determine alternativeperqonnel' ent are the loss rates and k , and D V the proportionate. nge in non- forces, a. - The calculations In Table .3.4 illustrate an'-application of this framework for -'the United States and Australia. The calculations take as the given with-draft forcestrength, Spt, the army force levels applying for the immediatepre-Vietnam period. Male non officer personnel, only are included.A full analysid would consider the other services, andwomen and officer, accessions."But it can be assumed that 'if . TABLE 3.4. PERSONNELREQUIREMENTS UNDER)DRAFT-AND VOLUNTEER RECRUITMENT: ANNUAL,ACCES/SIONS: UNITED STATES AUSTRAL 0 Mixed-for strength (SDt). 870,000, 40,00 -army enlistees Draft ptrcentage pf,strength. 1 .23 .40 Draft-induced perntage of strength .00 , 4ixed-force lostrxa (1-Dtk .289 'idyl-force 4ifferenti .075 elastidity.($) 2.43, . 1.'63. , %.Truervolunteerqossate 4vt) : WHVt 1-'Dt -.153 Ji-112 W141,. 1; . .132 .096' A , .-7 WMit .127 Accessions: Mixed-force, (Apt) 254430 10,400 Volunteeioice(A- ): vt .1414Vet WNDt '131,110 ' 4,480 ri 1.15 WIL . ut 114,840 3,840 ". WM,_ '1.30;41.11) 4 110,490' 3,360 1/4 ti e WM n Military Wage, a I olt '":11. 4 0 1. a 1 .` -60- . conditions of serviceare madeattractive enough touse 4" . . all-volunteef procurement far . i male enlisted army personnel, , no recru- itment'problemS will'obtain elsewhere , either. . , - estimates:of theEhAnges inthe operational force . ratio are obtained from ethei , soliibe#6--a and report fot - ;z the U.S., and the Detartmentof the Army for_Australia410 ' The with . . - draft loss rates are ,s given in Table3.3.1 The . :-.- : no- draft' loss rates are calculatedon the same basis as,they .were for Table 3.4, except.thatwe adjust the retention profile ._in accordance withthe.effect on re-enlistmentof . . _ spec ified alternative changesin relative wagesas well as abolition of the,draft. ,. For the U.S. an approprAtere- enlistment.equation was estimatedon 1964 and 1967 cross section data by Gary Nelson. 11Comparable. data was not': available for Australia,so a time-series regression for the period, 1966(3i to 1972(4was perforted instead. The results f or both regressionsare 'reported in Table 331 with full' Vans of variabledefihitiqn and estimates and procedures being given in Nelsonfor the United Statesregres- sion and in the Data Appendixto this study for the Australian regression. - 40. 'We note that the Australianre-enlistment estimation does not Make allowance forthedraft-induced component. The formulation of appropriatelags is very difficult for time series analysis at there-enlistment.level, whereas 4 - the cross-section'ahalyeiswas able to make appropriate . 1 I I . A .' . 5 . . r . IIIP , -6 TABLE 3.5. SUPPLY OF ARMY RE-ENLISTMENTS: REGRESSION ANALYSIS VD. , ..- UNITED STATES. crossection1964 ' AUSTRALIAlqUarteilr, 1966 (2) - 1972 (2) & 1967 Variable Coefficient . Variable ' CoefficientElasticity* (logarithm) (t-statistic) .(ta.statistia 04 Dependent-Variable RERA Dependent Variable NRERA .1, . Relative Pay 2.43 Relative Pay ...0. , -34.17 1463 . (6.75) (-1.85) , , (' . Draft Presture . 0.488 ! Unemployment --4.12 .105 (1.95) (-0.70) ' : . Depetidency Status 0.179 Six -year Term -15:38 .702 (0.361) Proportion (-1.46) - , )- Vietnam Service -0.436 Proportion of Strength 41.67 1.15- , . (71.503) Eligible (11.08)' Combat 'Status 0:0647 Time Dummy -0.27 . . (0.209) (-2.43) . . , v Constant -1.87 Constant 40.71 (-7.48) - (12.10) - . _ . '2' 2 R .571 , R .950 - N- 185 N 24 RERA = Re-enlistment Rate Army NRERA = Non Re-enlistmen_t R4te0Army * Evaluated at means of the variables , , a 4 TABLE 3.5. SUPPLY OF ARMY RE -ENLISTMENT$: REGRESSION ANALYSIS . UNITED STATES,crossection1964 ' AUSTRALIA, quarterly, 1966 (2) - 1972(2) & 1967 I Variable Coefficient Variable ..4Q,efficient Elabticity* (logarithm) (t-statistic) Uk-statistiE) ..f . A 'Dependent Variable RERA ,Dependent, Variable NRERA Relative. Pay 2.43 Relative Pay -34.17 1.63 (6.75) (-1.85) . . Draft Pressure . 0.488 Unemployment -4;12 .105 (1.95) (-0.70) , . Dependency Statui 0.179 Six-year Term -15.38. .702 (0.361) Proportion (71.46) Vietnam Service 1 -0.436 Proportion of Strength 41.67 1.15 . Eligible (-1.503) - (11.08) --. Combat Status 0.0647 Time Dummy . -0.27 (0.209) -- (-2.43) ..p Constant -1.87 ' Co;iifint- 40.71 (4.48) - . (12.10.1/ r- , - ..- --. R .572 R2 .950 N 185 if 24 I - RERA = Re-enlistment Rate Army NRERA = Non Re-Onlistment Rate Army * Evaluated at Means of the variables N.} A I adjustments, from survey data requltson draft-induced A enlistments: But the Australian lottery draft .system and the low level of draft pressure there,probably means that this islas a problem for Australiathan its fieglect.Would be for the U.S. (See Chapter 4.) The accessions indicated in Table .3.4. illustrate military labor demands under the alternativeprocurement systems. The accessions requirements ofa volunteer forcd will be considerably less than fora force using a draft, and without any loss of military capabilityas measured- by the size of the operational force. The calculations outlined in Table 3.4are steady 1 state requir ne is only, and appfy to the conceptual experiment of instantaneously changing froma mixed-force to an allrvolunteer4orce. In reality such aUge---wOUld involve a transition period during which notonly losses. from the existing Volunteer strength would needto be replaced,but also the voltnteer equivalent -ofthe conscript , - and con/cript- related strengthcomponent, This would usually imply higher transitional than steadystate accession require- ments, depending upon the length of the transitionperiod and the willingness of the government to permit temporary rundowns oftotal Army effqativgfiess. It i possible that such implied inter-temporalsub- stitutions might not he acceptable. For this substitution at least; the implication of a minimum constraintthat no 7.1 decline in this year's forcecan be compensated for by an increase in another year's-increasemay be realistic. As Franklin Fisher has put it: "it is small consolation-toa nation overwhelmed by enemyattack that Its forceswere more "12 than prepared in anotheryear. But this too is a matter for conscious decision in the lightof strategic needs. Differences Personnel Quality The Criterion of effectivenessapplied in the demand analysis to date is that ofquantity of Ciperationalpersonnel sustainable by accession flows. We now Consider thequality of the contribution by personnelunder alternativeprocure- ment systems. While this has both demandand supply elements it is conveniently discussedhere. ts. Demand for personnel qualitypossesses two components-- the minimum enlistment standardsrequired, and the distribution bf quality required(above the minimums If is commonly stated- that a mixed-forfe produces superiorquality personnel since more highly educated and able'individuals are draftedor in- / - duced to enlist t han would otherwisebe the case/and because .. r _under a voluntee:L. r force the militarymay be forced to lower , , ,.. standards if acession numbers.fall,shartof requirements. It is 'not clear that these;Apo -, are valid. We do ' , well to remember that.:the-.gre terpr po on of forces with a draft are still voluhtee and that the higskill force , /. components ard fully-Vd-unteer. Inductees a not-given specialized: training xn,high aptitudeareas because they '74 -64- -.simply do not remain in the service beyond thp compulsory . term. Volunteers on the other hand much more ex- perienced personnel than conscripts sincetheir-average length of service is typically threeto four times greater than for draftees .and they thus receive muchmore formal and on-the-job military training than draftees. The exact trade- off between experience and education inproducing military effectilieness is not knownhowever, and is further complicated by the differing motivation pf volunteersand draftees, presumably to the benITit of volunteerproductivity. Measurement of the trade-off is not essentialto the evaluation, however, since it is notnecessarily the case that a volunteer force will attract only"ill-educated 13 low-aptitude soldiers". The experience of Britain and Canada does not indicate significant problems withthe quality of recruits under volunteer enlistment. The ending of, National Service fbr Britainsaw "no significant dtteriora- tion in the quality of enttants"14 and forCahada it is reported that almost all entrants to the service"fall within the upper half of the populationas measured by'mental aptitude."/5 For the United States it has beeri shownthat an end to the draft would, by extrapolatiqn of the educationand mental test levels of existing' true volunteers, still'producea force that "if the occupational mix of thebase line force structure for the yeats ahead were staffed in the smite-way that comparable occupations are staffed in thecivilian 10 r -- 14. ecd omy, these percentages of high school graduates would achi ve the same quality mix for the Army as that ofthe. "16 civilian labor force. This calculation assumes the same . cOnditiOns of service with and without a draft. ,But a volunteek 'force will be accompanied bOimproved conditions of service, so that a military career will becomemore attractive to individuals who otherwise-would not consider the military because of the attractive civilian alternatives available. A study of United States Air Force accessions by A. A. Cook estimated separate reiressions for all enlistments. and found highly significant pay effects with the elasticity greater for the highest mental group--.236 as opposed to 17 .219 for all enlistments. The difference in' elasticities is...not-really large and the analysis, which was based on quarterly data for 1957 .to 1966; did not cover .zero draft experience, but it does seem that there is.a presumption that higher mental group enlistments will not be propor a- tionately less in res2onse to volunteer military pay increases. In our own supply analysis,of the next chaptei we do not review the quality distribution pattern owing to lack of education or mental test data for other countries.But we do directly consider the question of numbers meeting minimum enlistment standards. This:IS done by including a quality acceptance variable which, while it is a mix of demand and supply factors, allows us to control for shifts the supply curve due to changes in the proportion of -66- acceptable recruit applicants. In policy analysis we can then Constrain the quality variable to a given minimum acceptance level and so examine supply patterns under alternative procurement systems for a given quality crition. At what level should minimumacceptable standards be set? For the supply analysis we adopt the standards pre- vailing under a mixed -force and examine volunteerprocure- ment subjeCt to the same constraint. We should note, though, that this level may-be unnecessarily high. Pro- curement alternatives may affect standards not only with the possibility of volunteer shortages inducin eductions in standards, but-with a draft inducing.an increase in standards beyond the necessary level. (Figure 4.2 in chapter 4 illustrates these alternate possibilities). And there is more hard evidence to support the latter effect than for the feared volunteer force effect on minim standards. An indication of this is the steady increase in rejection rates for the Army in the U.S., from 23% in World War II to 35% in 1964. The increase was entirely due to increased mental rejections at a time of increasing general level of education. The effect is seen in an equation (3.11) provided by Stephen Canby, 18 which regresses' Mental Category IV (the lowest acceptable cate- gory, representing 10-10 percentile. on the test) pre-inductee acceptance rates on'population and unemployment for young men: R = -2.95 + .026P + -0.11) - (3.28) (2.40) R2= 81 - whereR = rejection rate, P = population of 18-year-olds and U = unemployment rate for 18-19-year-olds. The figures in parentheses are t-values., If P is redefinedas an excess supply variable (i.e. supply of 18-year-olds minus allen7 listed accessions), 76per cent of the variation is associated with this alone. The data period is 1952 to 1965. A possible weakness in interpreting the effect of excess supply with a draft on rejection. rates is that the equation does not allow for technical change in military production techniques, so that theremay have been an increasing technology- derived requirementfor higher quality recruits in terms of education and technica aptitude, in order to operate increasingly more Sophisticated andcomplex military equipment. The period since World War II has indeed Witnesseda substantial growth in technical positions anda decline in the relative number of'billets for the military generalist-- particularly ground combat. The ocbupational distribution of U.S. army enlistees is given in Table 3.6 for selected years 1945-1974 to illustrate this. Defining high-skill occupations as electronic and othertechnical, ,the major increase in skill needwas191571957,which saw an 80 per cent increase in the high -skill proportion. 1957 through 1963 P,R TABLE 3.6. OCCUPATIONAL OF ARMY ENLISTEES: PERCENT DISTRIBUTION UNITED 'STATES, 1945-1974 GroundOCCUPATIONAL Combat AREA 1945 1953 1957 1963 69 J.974 Other,TechnicalElectronics 39.3 6.63.8 N 34.4 7.34.9 31.2 8.59.3 28.8 8.69.1 25.7 7.0 21.2 7.4 _Mechanics Administrative& Repairmen & Clerical .8.915.1 19.112.1 13.716.3 16.518,6 16.319.514.7 16.621.5 Craftsmen 7.1 3.2 4%9 .. . 4,.. TOTALServices 100.0 19.2 100.0 19.1 100.0, 16.1 100.0 14.5 3.0 100.042.7 4.0 100.0 13.2 3.5 00rn Source: 1969-1974,1945 -1963, OfficeHarold ofWool, Secretary The'Military,SpeCialist, of Defense (Manpowee& Reserve Affairs'), Baltimore: John Hopkins, 1968, p.43; October, 1974. 769'. saw 'little changein relative high -skill reqUireMentsbut a further increase of30per cent inneeds was evident 199-1974. Clearly there was a nded fora higher proportion of entrants with aptitudes appropriate toadvanced electronic and other technical training,'and this Should account tor . an important part of the increase in U.S: Armyrejection rates since World War II. Still there is additional evidence that it does notaccouri, t for the whole increase. The difference between U.S. Armyenlistment and indUction standards after 1958, for instancesuggests that,minimum qualifications were not unrelatedto supply. conditions. Individuals who were rejected forvoluntary enlistment could still be drafted for twoyears., Further suggestive evidence . 19 is given in a study by Reaume and.01 , whofoUnd that when, detailed military occupational specialtieswere matched to comparable civilian o6Cupatiohs, the militarytended to employ higher quality peisonnel,wherequality was measured either by educational attainmentor mental test scores. Some more recent evidence also supports thispoint. Table 3.7, which compares the perdentage,distribution of.thetotal U.S. , . , . non-college population'(ages 19-21) bymental group (as° . . dAfined.by the Armed Forces QualificationTest): to that of true volunieers.in'fiscal 1973, 4ws that themilitary , . . services attract people who possess higherqualifications than the non-college population. -70- s 8 TABLE MENTAL CATEGORY' DISTRIBUTION OF EMISTEES AND.NON=COLLEOECIVILIANS AGES19-21), 1972 -73. (percentages) Non-college True AFQT'Mental Group Population VOlunteers Above Average, T And II 24 49 , Average, -III, 39 54 BelOw Average, IV 24 17 1, Not Eligible, V 13 , 0 TOTAL 100 . 100 Source: U.S. Department of Defense, Office.of the Assistant Secretary of Defense, Manpower& Reserve Affairs, (April 10732 !41110 Ire comparing alternative procurementsystems in their impact on quality demanded for personnel, itseems that volunteer recruitment may actually serve asa corredtive against over- stated acceptance standards. Further research is needed. here onlust what the appropriate standards ate, but it is evident that a draft systeM can have access to higherrquality personnel,(at'least for the period of 'compulsory serviceand, in so far as quality is measured by - education and mental... , test scores, by simply raising, standards. At the same time , . there is other evidence:that the quafity.of personnel obtained under a volunteer system can be quite adequate, even taking the with-draft entrance standards as appropriate. Moreover -71- the'vaunteer force has the additional,but difficult to s measure, advantage of indivislually motivated (asopposed to compelled) recruitsandmore experienced"perSonnel than O does a draft system. -4 .. a eN . , . , , . 40. ' 4\ CHAPTER 4: MILITARY MANPOWER SUPPLY ,- 0 1 . . . . . 1 "AllEnglAshmen tlien have, asyou say, Gentlemen, r a Liberty not to Fight for their Country,.and no Body can: make :-em do).it, unless they, kind hearts, shOuld happen , 01 . to be in good humour and offer their !-- .. service themselves."' , -- ,. - ' Captain George St. Loe , AAscourse about Raising 1 . Men, (16811) . . . &. , . . " , The,askt in thischapteristoy the . *1.16.., - -investigate' 4- supply of labor to the military services with. aview tO, .assessing tfie adequacy of voluntaryenlistment for peace- .= t time(including unitedwar) -military forces.Wepropose . , a model of enlistment behavior based'on theeconomic theory of=,OccuiDatiOnal Chdrce anduse_this to specifyan econometric e. model for empirical,appliCation'to the fotircountries being . considered. Linking the suPgliT estimationwith,specific- ;14 ation of military manpower requirementsthen permits the- estimation of budget ccist'of balancingsupply aqd demand. . ! in,the military labor market throughcompetitive wage . vo,.adjustments. 1: . ( . A MODEL OF ENLISTMENT BEHAVIOR Theoretical Model- .110 , Recriiits for; the arMed.forces'come' foirrtlie-1,55i ' I -?- -, , of national manpower Over'the,minimum:schoolleaving ,age., ., . . . . , . WOmen have traditionally .beeh eXcl,uded.fromsign4fgant , \ .',/ , , ' :," Military participdtion so that theIgesi.pfi . ciol.Oan be . . I. . . 4 1;4.. considered to_comprise:Men only. The,toyal nember of , l , : . - I t . ',a...So 4 . -73- 4. c . , men' available are the survivors of"thbse . .. . born, in past , ... yeirs', adjusted for . net migration.' The requirgmeht . for .: entry at the bottom of the military hierarchytends to . 1. , . .*. restrict recruitment from thisAvailable population to . - ,.. young men, since they tend to be'less .. , established in .. 0L o , civilian job progression.structures. For silt 'iar Teasons the)se young men committedto continuing eiluCation-and , . ti f a apprentice training progkams inthe civilian community ffl tend not to enlist, andso restrict dle recruit population 'base. . A further restriction, randone reinforcing the age 'bias in recruitment-; is eli4ibtlityfor military service. 'The imposed requirementson physiOal, mental And character 'standards.naturaliy 'reducethe populatillh that 'willbp acceptable for military service. This standard's factor, though, is one element that isa, polacy oottroI variable if for the' military, and's°we re-serve its incorporation - into the. moel untila little later. For the'prpeerit we express theavailable population 4 for military enlistmentas: RP = (1 -".p ) P 4* M>SL. (4.1) ...where-RP= recruit population P M>SI.= population of young Males 'above dhool-leaving age . 0 pm::=.'proportion, incontintIng edudkiion ' and aPprehticeship . 4. irhat will determine thenumber forthcoming for enlistmentfrom this recruit , population?Each individual- 'within this population'can-bewiewedas4facing.a choice between a military job anda civilian job (the best of t those positions open tothe individual0 The individual surveys eachjob and considers the advantages and dieadvantages of each, sdchas expected earnings, expected advancement, working . conditidris, locatiori,etc. ., , In pririciple these advantagesand disadvantagescan be classified as pecupiary and non-pecuniary,.andwe assume that there is some finite'rate of exchange between 4 . : : , , . i pecuniary and non-pecuniaryfactors so that an "individual can evaluate-non-pecuniary costsend benefits in .netand 5 pecuniary terms. The individual then selectsthe job with highest net advantage,given'these opportunities open and _the' -individual s preferences. The-choice is mdeon .the. basis of the individual's perception cif theseriet advantages,which'may.Ormay not . be An accurate reflection of the real net advantages,and account =is taken of the,futurepattern of costs and benefits with appropriatediscounting for. time.. ThJindiVidualis assumed tweeelcto maximize utility. in terms of netadvantages. There is no assertion of,purelypecuniary motivation.i.The choice criterion is that an individual will enlistinthe military'if E. 4 -75- WM, >. WC + dWC (4.2) n WM. 1 Y where WM .--S.t.111-+,8)n E (4.3) ,5 ., ',. 'n WC. C1-= E /11+a)n , (4:4) with WMi being'-military earnings and WCi civilian earnings . in period i. a measures the individual's subjective . discount rate. The stream 'of earnings, WM1, may inclUde income expected from civilian employment subsequent to military service. 0 - The coefficient 'd' measures the individual'snet preference for the.non-pecuniary aspects of military life, _expressed as a percentage of civilian earnings. d'may be potive or negative. Presumably a pacifist has d equ to plus infinity. .The coefficient thus encompases all' situations by compacting the full variety ofnon- monetary considerations .into the single Summary measure - of tastes. Naturally,individuals in the recruit population will .differ as regardhei alternative civilian employment opportunities and thair relative preferences for military , vs. civilian life. For_ each person, thoughwe can postulate * - a reservation -,Military:wagM ,tha;t would.make the sum of peduniary and non - pecuniary net benefits from military employment juSt equal to that pertaining for the best_ er civilian.employmeA altern 'ative available. i.e. WM= WC + dWC (4.5) tor '46- . It` At the reservation militarywage,. each 'individual is indifferent'between enlistingand not enlisting. If WM > WM* then the individual would'enlist.' In principle, individualsmay be arrayed according to * 4 their reservation militarywage, so creating'a frequency , distribution like that illustratedin Figure 4.1 for the unimodal symmetric,case. The frequency digtribution is the joint distributibn of civilianearnings and relative' tastes for military sgrvice.Foi a given WM,all-individuals with reservation militarywages smaller thanthis actual, « f . military wage will enlist. The'cumulative frequency distribution of reservation militarywages thus defines the supply curve of military laborin. relation tOalternaz tive levels of military earnings,pther things being held. constant. It follpws that the general formof the enlist- ment supply function is: r. A AP f(P7M' MWC'aWC!MvaWC'.adWC)4; (C6), _. . \ ' f(WM, 14(l 4.d)WCa(1*d)WC) (4;7) . . where/ A is applications for militaryenlistment . RP is ,recruit population .- WM is expected military earnings M..wC,is the mean valueof expectedcivilian earnings, . . . ,. M dWCis themean va14e of relativemilitary tastes .cfr,;?, is the 'standard deviation 'ofexpected civilian "' earnings a dWCis the standard deviation of relativemilitary tastes . I -77- aC - CUIIWATIVE NUM MI WHO WOULD %MUST PT WAGE WM. gEsesw(TlomMILI3ARY WAG A)FREQUENCY DISTRIBUTioN OF POTENTIAL. ENLIETEES .CLASEtFIEO DY-Mum RESEItVATioN MILITARY WAGE I .MW in%) riswilo) Knuetsalt;fott0 WOULD 11141AST p nmuptlialt of , atifi.Isvan W011. EXP.EGTED 101ILATARY Where -r B) AGGREGATE ElfriLtiTt4e441 5UrniCUICIe FIGURE I LiThm LABOR sumx vt,picitek! -?8- From the model of rational occupational choiceit follows that wa impute the following properties to militar labor supply: a positive function of (11. 8) the military wage: a negative function of the civilian wage: a positive function of the relatime taste '14.10) for military Service: ra positive' function of aA- the recruit popu- m-)> lation: .The specific properties of the supply schedule Will be given by the form of the joint frequencydistribution of earnings and taste, (1-+ d)WC. A convenient fication of 'the model is to a-ssume__Ilaat the variance and' .. distributional- form of the earnings:antaste components- _., of the joint distributiori _do not alterdver.the period oft--f:---_,---': analysis, though theii mean level may.. This means rewriting '.., .equation, _I-TY-as_ , '-.7. -,t, ti A -- = f(WM, WC, d) RP where-iv denotes mean:Note. that in' using ag applications .rate as, the dependent variable we' .assume that applications . _change. equi-proportionately with.re'bruit population._ We have so far considered_a free market choice model. -What difference does the existence of a military draft . make to this.model?' Provided voluntary enlistment isstip.1 . , . permitted, -as is 24.1aly for peacetime, then the binary I choice Situation remains. What alters, is the structure of Incentives influencing that choice., If an individual chooses not to enlist, then he must nqw face the possibility of being dohscripted., We therefore exathine the effect of ,this possibility on- . enlistMenchoice nv looking at the implications of a probability f being drafted on the expected pecuniary -and non- cuniary returns to remaining in a civilian . emplbyme t. 0 the pecuniary.side we can now write WC = (l'-eD)WCZ pipet, where WC is the expected income from not enlisting WC' is the expected income from civilian emplqyment pi, is the probability .of beinidrafted .The sign of the partial derivative DA/apri Will . .depend upon'-the Sign of-1-WM-WC'). For (MM-WC') < o, r.the usual -case-i- the "effect is a.h a PD. , g7similar'eflect obtains for the impact pf the probability of being drafted upon ttiehon-pecupiryreturns to.not . ..Remembering that. the tadte coefficient a net.measure,..d > o is defined as a net aversiom to military An, increaseih prbbability of being &rafted will -, therefore increase d and thus produce an expected positive effect upon applications for enlistment. The.non-pecuniary effects of the draft reinforce the hypothesis giyen in (15). The total effect .of the, introductiori of conscription on"the'supply function canbeTecognizedby writings A = f(WM, WC, d) RP ti -t; - = f(WMT-WC' p ) /4.15) ' D With thiielipression, WC' itself can be written to'take it account of the fact that in civilian employthent, unlike fixed' engagement militarymployment, there isTa chance of being unemployed i.e. WC' = pEWE + puWU %(4;16). ' r,. PE is Probability -of being employed 0= 1- pa). - where WE is expected full-time civilian earnings. WU is expected income while unemployed. 6 In addition, Unemployment may have a separate effect of its own which wofks through risk aversion. Indiviauals' who are curreniiy unempl6Yed br have a high probability 1 of being unemployed"may value their income pro'Sliepts,af .soinething.less than theirmathemitical expected-value - say because of such factoks'as.the social opprobrium or personal psychological loss attached to being unemplosred. . : ,If this is so we should include a separate ,unemployment variable as an agument of the supply function. -81- 1. r The theory developed so far is actually one of supply offers - applications for military enlistment. What,is important for milita* manpoWer, strength is enlistments obtained. Translation of applications into enlistments is necessary. The conversion element is ;unitary enlistment standads but we must recognize that, this'involves two considerations: the pure supply factor. of the quality of. the personnel that offers itself, and the policy control factor of.the level at whin-enlistment , .standards are'Let. If we assume that the variance and distributional form of quality is constant'and that. enlistment standards are fixed, then the supply equation. , becomes: ti 1.1 U r%) f (WM i WC", , pr) Q): .(4-.17) - where E is the number of military enlistments -. is the unemplayMent rate in the recruit RP Population . Q is the quality level of recruit applicants. We hypothesize: since an increase in average quality, will imply, ceteriq , paribus a greater proportion of the recruit applicant population able to meet fiXed 'enlistment standards. 4 Econometric Methods We wish to estimate the supply'function given in general form in equation (4:17). Zn earlier- studies the assumption has'bommonly been made that the functional form chosen should express decr!easing elasticity of supply with - respect to military paw. Thus, Altman argued that: "As the number of enlistments increased, however, the size of the remaining_ population would fall_and those left would have a weaker preference for military service. Thus, they could only be attracted tb the militry by proportionately h gher leyels of pay, i.e., .the pay, elasticities would 1 1' fall." But the supply function depends upon'the joint distri- ,. bution of alternative gvilian earnings and relative military: tastes. It could bel for instance, that there may be a, range of increasing elasticity as' military income moves into 4 a range where it becoriles-competitive'for the populous group of middle- income earners. A normal shaped joint distribution, for instance, would have a range.of increasing elasticity o , followe'd by dedreasing elasticity.2A continuously -decrees- ing elasticity could,-inethis circumstance, be inappropriate,- depending upon which segMent of the function is relevant. . , On the other hand thereiss some. evidence:that the / / . . a -civilian earnings component of the joint distributionI is-- , . in fact distributed 16g6orMally,3ancrit can be shown that . 4 . 4 7 for alognormal distribution the price elasticity of supply of"enlistments will decrease over the whole range 4 of increasing enlistments. But this refers only to the distiibution of earnings. .We must also consider the distri- bution,of tastes. And here, unlike for income, there ,is little established theory to guideus.. Mathematically c&ivenient.results would be obtained if tastes toowere lognormal, since then.the sum 'of the logarithms of the two component distributions, WC and dWC,'would be,nprmally distributed. The available evidence, however, does not provide- support for a.lognormai assu. ption for tastes. One Australian survey, for instance indicated thattastes, for the saMple surveyed (N=100) and at the time surveyed 5 (November 1968), were normally distributed, A U.S. Survey, conducted*in 1964 fora larger sample, indicated bimodality" . - in distribution of tastes, as is,seen in Table 340. , TABLE-4.1 ATTITUDES TOWARDS A`MILI'l'ARY CAREER' Attitude Percent / r ' . Like very much like fairly. welL: - / 20.3 indiffewt . 23110 ..dislike a 1ittic f2.0 dlslke very mu:7n 30.6 4 - . **Source: Project Talerit: The'Ameridah high School ----1-4-."--- . Student, University.of Pittsburgh, 1964, 4 ...... a. ' Appendix .C.,p, 16, . .. . R4 It is quite possible that bimodality willbe important in military tastes since.this isone occupation with respect to which many people may have strong feelingsone way or the other. It is not clear that we can assume that "thenumber of individuals with strong feelings eitherway diminishes : as the strength of the attitude increases. "6Unfortunately the survey evidence we have is not availableon any continuing basis, and that evidence is anyway difficultto interpret definively since much dependSon the questions asked and the qualit-tive answer categoriese'employe. If the assumption oflognormality isfeltA.nappropriate Ifor Militdry tastes, the outcome ofa mixing Of the relevant.. . . taste distribution with the civilian income distribution ,then dependS upon the'weights to belassignedto the component 'distributions. But these weight6 a eunknowr sincethey are . 0 dependent upon the relative strength of pecuniaryand non - pecuniary preferences ofindividluaid. This inability to speci a priori the'functional form for opr est' ating equation ins a difficulty for adequate -- representation of thg.tot 1 supplyfunction. 1314 our concern is for that limited range of the supply functioni for-which we have-data and which-is relevant to a peacetime military forte. ACIcordingly a more ad hoc choice. of functional.form-__ may not be'too misleading. To this end.logit, logarithmic; linear and log-complement specifications were estimated,_ and then compared using the criterion of.Minimumresidual e 1.7-47111 -85- sum of sqUares for equations in which the dependent variable - , had been standardized.,7 A non-parametric* test using the chi Squared distribution was adShted to test forsignificant 0 . . differences in the residual'sumof squares. Where the test . indicated a difference at the. .05 leveltheequation with,-*- '14 minimum residual sum of squares Was adopted.Where the ' hypothesis of differencewas 'rejected at the .05 level, the logarithmic fOrmulatiorrwas chosen, for its convenience in interpreting elasticities. The logarithmic form was the most commonly accepted functional form under thegoodness f fit criterion so that the basic estimatingform employed can be written as: g ln ---=ao-+ al lri WM + a2 In WC + a3 InUt RP t t t 0 +,a4 lndt +a5 In PDt + a6 in Qt + e- t (4.19) The basic estimating equation is applied separately to total defenSe enlistments and to army enliStments for t. each country, using quarterly observationsover the period A 1966(2) to 1973(4). The exceptipn to this is Canada where annual cross - section data, 1.'966 to 1973, was applied to total defense enlistments only. Quarterly.data. was .. . unavailable for Canada and there are no iividual service enlistments to the Canadian unified defense forces. 4 , I Single equation estimation employed,.at the risk W of some bias since enlistment and induction rates, wages and . 'unemployment rates are mutually related. The exact'extent of this simultaneous eq,ation bias is unknown, though the - direction of effect willbe to. understate pay, emploYilent, and induction elasticities of.supply.8 However since the civilian.wage and unemployment variables ire economy wide the bias is probably small, and the gain in conveniende from single equatiOn estimation is larg..We chosetoserron the side of understatement of elasficityof supply. Because.quarlerlY data is employed weiadd seasonal 0 dummy variables to equation (3.19) sand perforth theregressions .on seasonallyunadjusted data.. There are theoretical. and empirical reasons for preferring this approach to a pre -. ,adjustment of the data by some variation of the method of . moving averages.9The existence of sehsonallAy'in the 'date, introduce serial correlation. But equations were 'tested using the Durbin-Watson statistic, (or Durbin !h' statistic. when a lagged dependent,,variable was present). if the hypothesis of zero serial correlation could not be accepted , ., , at the .05 level o-significance, adjustment wasmade'by . . _ . . using estimates of the serial correlation coefficient Obt- ' a 'tained from the Cdchrane-Orcutt iterativeprocess.' It will be noted that the formulation of themodellc -given in equation (3.19)assumes that the dependent variable respondi instantaneously to.current changesin the S -87- s independent variables. For quarterly data, the forces Of ignora'dce, inertia and the costs of change leadus tb believe -thait adjustment and response may be partially delayed. The . most convenient formulation of such'a distributed lag profess is to incorporate a lagged dependent variableas an additional explanatory variable. This assumes that part of the response, to changes in.independent variables takes place in the current period, with the remaining fraction of the adjustment'spread over succeeding periods in diminiihing \--2) 'increments. It also assumes that the adjustment process is the same for changes in each independent variable.With -./ this lag we have a dynamic.estimating equation which is written as: E . - Boln.itt + Bi c + B n WC+ B3 ln U t RP t +. B4 ln d + B5lno ln Qt .at"'t - B6 E . + B7 ln (4.20) RP 't We performregressionsTot both the static (instantan- eous) and dynamic. (lagged) equations, with the latter enabling us to estimate long-run, as:opposed to impact elasticities 4 from quarterly data. The basic set of supply - estimations is thus"alternae 1, defense and army dependent variables with both static and dynamic formulations for three countries. Canada is.the Z . . . exception since its unified defense force meant that only a. . . \ ' . . \ ^ ,1*-oe-1 I . / [ ... ? * , .1 ._ -8a- t I 0. defense dependent variable was available; and annual data'. meant that a iagged-fo'rmulation wasmot ecessary: For all countries an additional set of regressions was performed, replacing separate military and civilian income 'variables by a single wage ratio variable, an amendation that'is discussed in detail below. A One. additional joint,drosa-section and time-series equation is estimated across states by quarters, 3.66(2)- ....' 1973(4) ,for Australia, to4take'advantage df the .richer army enlistment data available there, and for comriarison with e the national time series results. The estimation method employed was ordinary least squares withindividuaLconstant 0 terms. The technique is also known as covariance analysis° since a set of regressions is run'withand without state dummy variables and for each state individually, and_the resultant residual sums-of-squares are used to test the null hypotheses of no difference in slopes, no difference in inter-. cepts and overall homogeneity for the.states. Estimates of Variables Erilistments 4 'Enlistmentswere estimated as total number of non- . prior service male general enlistees. Enlistments origin- ating outsid the country-twere,e?ccluded since they would be related to external factors not represented in our estimates of the independent variables. Women and officers , . ap -89- 4 were excluded sine they represent a small proportion of military accessions, their enlistment is governed by .special and" different institutional factors, and a draft is largely used only for male general enlisteet, ' Fixed enlistment terms,of engagement range from a minimum of-theee years for army enlistments'in'the U.S. ,to,a maximum of 12 'years for some Navy artificer trades in the Rpyal Navy.. Most engagements are for 3 to 6 year reriods, and we assume that the distribution of enlistees n by term of engagement is constant. Wheritthere is a change in length4of service options available for enlistees, an enlistment term dummy variable is introduced, Canada is An exception to the fixed engagement system using indefinite career.engagements with release on request. Recruit POpulation The available population is defined as the civilian labor force. of males aged 15-19 last birthday: The age range'15 -19 usually accounts for 70. percent or more enlistments for each country--since militarystfitness standards and the common Commencing recruit wage tend to inhibit older applicants., The Population is restricted to civilian labor force since individuals enrolled in school beyond school-leaving age will not be'enlisting in the military while in school. It is also assumed that those _ continuing on to higher education through civilian institu- 1 tions will have a low propensity to leave school and enlist-- I , -90- though they could enter officer training programs: Tn. cross-section analysis this could bias supply elasticity .estimatee by raising the enlistment rate from high income . regions relative to'.1ow income regions. But for time-series analysis it is important to take account-1'0f the changes in propensity to continue on to higher education. _ 1f differing propensities to enlist could be attribut-: ed to other group6 in the population - - regional or ethnic . A for example--it might also be useful to incorporate variables .4. taking account of their representation in the poPulation,or to estimate separate equations for different groups. The evidence here is meager; however, and the influence of changes in such,factors is probably quite small for-the 1 period of our analysis. These factors are undoubtedly .highly important for fordisting and for analysis of ' certain important social issues,(such as black military-p'articipatiori in the U.S., French - speaking military participation in Canada, migrant enlistment in Australia and regional military representation in Britairk): These are issues be- 11 yond the scope of our study. ", Earnings Military earnings are defined' as the commencing wage -for mq.itary recruits, including the value of income in kipd (rations andquarterb)4nd the associated tax advantage , 4 where applicable. Combat associated pay is excluded which i As . 'may cause bias in estimation, e.g., in Australid.regional allowances,and war- service benefits were 'ncreasing at a time (1965-67) when, otherwise, the ado tied military income Measure indicates deterioration.in relative military- civilian income at a time of increasing enlistments. ApprOpkiate data could not be obtained to all4wior this. Similarly for the proper allowance could not be made for the June 1972 and April 1973 schemes for payment-of enlistment bonuses to volunteers foithe combat arms ands combat-related technical skills;_respeCtively. We attempt to date pay changes to the time implemented, though again ti full information was not available and some changes may be announced or effective pay dates. The measure'is also deficient in that a longer-earn7 ings stream would have been preferable, to take account of ". .changes in promotion rates and of differential civilian-. military earnings profiles. Again adeqdate historical data could not be obtained, and so we must'suffer estimation bias resulting from this source. It is hoped the bias is not large, since there is evidence that the subjective discount rates of yoUng men are very high--of the order of 25-30 percent:!this, plus the:fact tliat a high proportion of men enlist with the deliberate intention of serving only one engagement, meansthA military income beyond the first few years of service has little weight in most enlistment decisions. .43 .242 . r 4 may cause bias in estimabion,e.g._,- in Australia regional allowances and war-service benefits .were increasing at a time (1965767).when, dtherwiSe, the adopted military , income measure indicates detterioration'in relative military- civilian income 'at 'a ,tirae, of increasing, enlistments. . - - Appropriate data could not 5e obtained-to allow for this. ,Similarly for the U.S., proper allowance could not Je , .: . \ made-for the dune 1972 and AprilsAprils -1973-1973 sc.schemes for payment of -, enlistment bonuses to'volunteers for the 6ombat arms and -to 1 combat-related technical skills, respectively. We attemp to date pay changes to. the time implemented, though again full information was not available and some changes may be annouficedor effective pay dates. c,., The measure is also deficient in that e longer earn- . , ings stream would have been preferable, to take account of v. . - , Changes in'\ promotion'. rates and of'differential civilian- , . 'military-`earnings profiles. ,Again _adequate historical data 1 could not-::be obtained, aild so we must suffer estimation . bias restating fromVis source: It, is hoped the' bias is e, '1: V . .,, not large; sinc6 thgA is evidence that the subjective discount rates ofung men. are very high--of the order of 6 , ' 25-30 PeCenE. This, plus the eact thata high proportion of'men enlist With 'the deliberate intentron'of Serving olll one engageMent,means that military income beyond the first - , 4 r'' , 3 . - ,_ - ' \ few years,,- servIad has little weight in most enlistment , . --, i decisions.`,,. fr , ,, the in-kind imputation made forilitary earnings is made at 'official rates and a may not measure the actual _ , . 1 . value Of suchproVIsion tothe recipients. A 1963 U:S. ... military survey showed that Military personnel appraise "total income" at much less than the cost value calculated by Department of Defense accountants. In-1963, first year base pay for enlisted `men was $1055, Defense Department defined total income was $1830 and perceived, pay for all the s cash, income-in-kind and deferred benefits was , . only $1550.1 .This perdeption difference can bias pay' , t elasticity of supply estimates, depending upon whether pie : . ' source of measured militaryincome variation is cash or .kind., Breakdown of-total military income measures was not available to permit 'testing ofthis, thodgh we note that the 'difficulty does not .hold for Canada where the 4 6 concept of a "military salary" has applied to military- earnings since 1966. A "military salary" was adopted in Australia in 1973 and effects the last four obsdrvations. Civilian earnings were defined.as average earningb' of male employees, all 4ndustries. Again an earnings stream would.have been desirable. But such data are not available on a continuing quarterly basis. The decision wasmade that current data reflecting changesin labor market conditions were more. important thanstructural accuracy--particularly . in view of the high discount rate of young men andthe broad similarity of military and civilian earningssrofiles, -93= exceptfor the 'united States pre-1971 where first-term pay increased little until the re- engagement or committal point. Inability to isolate age-specific income measures is probably a ,source of bias and inefficiency in estimation, due to likely divergence in earnings fluctuations betWeen youngmen and older males. Difficulty also.arides from out lack of knowledge of expectations. We simply do not know much about the extent to,which individuals anticipate pay ipcteases, though this is probably more important for the military income measure than our broad civilian earnings measure which isan average of the myriad of different wage rate movements in the civilian labor market. Both, civilian and military earnings are deflated by the consumer price index to provide a measure of real earn- , ings).an0 are. converted to indexes (1967=100). Theratio of ciyilian to military pay can be employed / as a single variable replacing separate military and civilian income variables. This has the advantage of avoiding multiCollinearity problemsilthosecountries where military pay is closdly tied to averagecivilian pay movements, but the single (ratio) measure involved the implicit assume -, tion Of symmetric response to alternative income changes. ,The in-kind component of military income could well produce' asymmetric-response, as could a correlation between civilian pay and family incomewhich:wouid introduce an "income C15, % -94- effect" into the coefficient forLvilian.pay. 14 It will be remembered that an assumption of constant variance and distribution of civilian earnings was made. 'An income:distribution measure such as Gini coefficient or the variance of earnings could, in principle,* be included to allow for possible violation of this assumption. But continuing dataof this sort are not available on a quarterly basis, Tad for some countries age - specifi income data are Jo notavaiiable at all. The inclusion of a aeparate unemploy- ment varilble will operate as a proxy measure of fluctUations in the distribution of income: ,We expect little fundamental distributional change over our short period of analysis. sti f Unemployment As a proxy for variation in civilian earnings, unemploy- % ment can be included separately and not just as an adjustment to civilian earnings. The unemployment rate variable adopted was,the unemployrrient rate for young men aged 15-19, or the closest available age grduping in the official statistics.. An excess demand for labor variable in thecivilian labor . market would have been a better variance or risk proxy, or even separate inclusion ofa vacancies' variable to test the job opportunities hypothesis of labor mobility,15but vacancies data are not age-specific even whdn , . The product of average duration of unemployment and - the unemployment rate might also have been 4n improvement, -95- 4 fy in prinCiple, but high correlation'ofthe two variables means, that there.is'little real incrementalgain in explanation, 16 as isshown in a recent study by.J.,C. Hause. :Moreover age-specific duratioh of uneMployment data are not published . . . for pritain ,and Canada on a quarerly, basis , <' Tastes - We are obliged to maintain our assumption of no change in the variance and,distribution of relative tastes for the non-pecuniary aspects of, military and civilian employment. P. There is alMost no evidence on which to develop alternative , I . assumptions; There the mean'ievel of tastes. The bestevidehce available to this writer was for ..Britain, wherean ongoippsurvey 'of the publib's attitudes to,defensehasleen cairied out since April 1971 for the Ministry of Defense. The questions asked permitted one of , . three qualitative,categdries for an answer, so that %-ig- i .....,, ,nificant,aistributional evidence is not 'obtained; but in < ivi t ,, examining the level of,agreementto the qUe:t4ons, trends ; , ,,:, in the,gen eral 1level of support for military lifecan be . . . S'1..,.,'''t41'' emaluated. For Britain, for the 12 surveyScondU4ted since .:,.t 7 f . t ,* , April 1971, the major characteristic of thseries;:sthe relative stability of the'response rates to9moseof the ques *tions asked, and this is in spite of the situation in Northern. - a. o- TABLE .2. TRENDS IN MILITARY TASTES, BRITAIN 1971-1974 , " 1 ,... Survey ,QuestiOn-1: Aimed Forces .QuestiOrn 2: Career Date 2 \Response - % Response (absolute or Sample Size (very good or Sample Size fairly (N) ' quite good (N) essential) career) r. .. Age Group 16+ 16-44 '16± 16:24 16+ 16-24 16+16-24 . . April 1971 97 95 2196 393 .94 91 2211 222 July 1971 94 . 91 ''2122 379 . 93 89 1455 215 Oct. 1971 97 ' '93 1966 351 94 90 1361 188. Jan. 1972 97' 94 2032 367 94 89 1407 216 June 1972 96 95 2115 375 . 94 91 1385 196 Aug.-1972 97 94 2068 *370 95 93 1401 214 .0- Oct. 1972 96. 94'. 2002 359 94 90 1369 204 Dec. 1972 97 95 1980 357 95 92 1312 . 200 . . . Oct. 1973 96 95 . 1749 308, 93. 93 1082 137 pea. 1973 96 95 1885 333. '91. 90 1318 206 ' Feb. 1974 94 . 94 2112 369. ''93;. 89 1439 202 . . May 1974 97 95 1920 351 92 93 . 1237 185 1. Question 1: "Would you say the Armed Forces are absolutely essential, fairly essential or not essential?" 2. Question 2: "Whatisort of career do you Xhirlk the.Armed Forces offer today; would you say it was.a very good career, quite a good' career, or not a very good career?" Source: Ministry of Defence, London, 1974 (Unpublished result-of surveys by NDP- Market'Research Limited for the Ministry). . -97- _Ireland .(see Table 4 .2) . Itis,assumed that a. similar result would obtain for Canada, gince fheliehas:be0i no ..ter.. - combdt, involvement ofi;Canadiantroops, or major 6 ihg-Of non-pecuniary conditionsof service, over:theperiod , our :analysis. . . , , - . . T.C:.:, , '/Such an assumption 44 be appliedwithout further: ,,- ,-, '). investigation for Australia and the Onited"States. The .. . ; involvement of those two countries in the,Vietnamconflict, with the associated trying living conditions'andcasualties Tor-troops involved irethe conflict,repzesent an important .4 ' I change in'the objective conditions of militaryservice during .,w, .4114. . the period ,of that inlYolvement:71..variable.suchas casualty .t rates``could serveaas a measure of the influence of the Vietnam conflict upon taste chhnges. But this is apartial representation 91y. .4; `A dummy variable could also be usedfor the period of Vietnam involvement. methOd we have adopted howevek is'to measure attitudes to the military as expressed in ; the propo4ionof favorable respondents in public opinion palls on, "whether the U.S. (Aust lia).made a. mistake 'in .* :. , sending troops to Vie*tnard. ThiS approach has the advantage , / . .4, , of-measurIniettitudes directly and continuously, and of ihereby,reflecting changes in public opinion,On military . . . involvemen.in'Vietnam in a, way thata dummy variable cannot. A'priori we might expect Vietnam to have beena positive , , . a influence early in the War, through its appeal to patriotic, aavey)ture, trrel and pecuniary motivations for enlistment, , . . . / but becoming less so as publicjoubtsabout the wisdom of the t. comtitment increased. This, at least, is the*hypothesis expressed to this writer by army recruiters in AustrAlia and the. United 'States, though to what extelt such an effect overcamedanger and discomfort disincentives.to enlistment, even earlin the War,.-3s what is to be tested'. We recognize that-Such poll 'data is an imperfect measure for our purposes.*Questions.asked refer more to defense, and _foreign policy 'attitudes than to attitudes to military careers as such, and it is not possible to obtain .continuous series for young men only. Extrapolation t# beyond 1972is also arbitrary, employing linear interpolation through to a single -"retrospective" question asked in both countries an late 1973. Draft Probability The probabildty of)induction can be .estimated as the number of quarterly inductions per 1000 males of draft- ), 'eligible age: 20 year olds for Australia and 18-24 year olds for thd'United States. The implied assumption is that individuals use current,quarterly data to forecast their expectations about the,probability of being drafted. 4.k . Naturally no measure of,draft probability is needed for Britain or `Canada. . 4 -99- This draft probability measure is po be usedto estimate the effect o t the draft in-inducingenlistments. Setting the draft at zero would thenscreen out draft- ' induced volunteer influences in examining the behaviorof fully-volunteer force 'recruitment. If draft - induced enlist- ments are not allowed for in the estimation; the elasticity of supply will be biased downward. An alternative procedure to use of a draft pressute variable is use responses of firit-term.servicemento survey questionnaires to estimate the number induced to enlist by conscription, In the U.S., individuals in the serviceswere asked whether they would have enlisted in the-absence dia- , draft. The proportion who said- "yes" or "probably yes," as/ oppospd'to "no" or "probably no,"are classified as true # volunteers and that proportion of respondents is then applied to total enlistments to estimate the true-volunteer and draft- induced components)? Regression equations can then be estimated-using this adjusted enlistment variable thereby eliminating the need for a separate draft pressure variable. - . There are a number of difficulties with this -sdrvey.procedure. On the practic al side survey-results are only available for the U.S. and then only for the'years of . *0. 196.4 and 1968,, so that adjusment of timesserie4-data, ii inhibited. The survey sample also differs betWeen the two surveys, with personnel station,ed overseas and Mental Group 'IV t.. 1 111 O I enlistees being excluded from the second surVey. On the conceptual side,.there are the usual limitations of survey , method-7with whatpeople say not necessarily being the same as what theydo, and the, standard problems of i4er- , pretation and structure of questions and answers applying. For example, some true volunteers whose expectations Of . military life have note 4een realized might now-answer 6no r to a question about-th'eir voluntary enlistment to cover up their bad judgment or earlier ignorance/ pr because their knowledge and. perceptions have now been altered and *. it is difficult to answer a question from the perspective of one's previous outlook. !IP Also the surveys undertaken were restricted to volun- teers. It is likely that draftees include menwho would volunteer in the absence of a draft, but find it moracon- venient to be drafted--to let the'draft make adecisMenfOr them, or to pe rmit a shorter term of service and so find Out about military life without a lOnger legal obligation to remain, In both Australia and theUniedStates,' I individuals could.in fact volunteer to be drafted before their final draft-service liability was otherwise deterhined. Also there may be individAls who were denied regular volunteer entry to the military, but are accepted under separately admin'is'tered induction standards. For these reasons it seems preferable to employ the I 12 Y -101-, direct draft pressure variable rather than a survey-based adjustment_tech4que. The induction variable is an ongoing. measure available for both countries and it is able to allow for the net impadt upon enlistments of both draft induced volunteers and volunteer inductees. Data overcour period Of analysis also now has the' advantage of including zero draft observations, so avoiding the suspect extrapola- . tions.to a zerodr4ftenvironment that were necessary, at . least for the United States, before 1973. There does remain the difficulty with the U.S. draft pressure variable that draftcallsc s arethemSelvesdependent - 414 on the enlistment rate. Undekr the Selective Servide system, state induction calls took into account thevoluntLr- 18 enlistment contribution of each state to the military. In'conSequence the draft pressure variable is not 'truly -1 exogenous, and is likely tO involve simultaneots equations bias tending to bias the-draft pressure elasticity estimate toward zero. This is not a problem for the Australian meas- ! 54- , since 'draft calls were set at a constant absolute a R _amount for the whole period of operation of National Service, 1964-1972., .A dummy variable is not employed for (r$ ts Australian conscription as changes in the size of the draft eligible population do alter the draft pressure- thatis implied by a constant absoluteintake of draftees. Or Quality Level The measure,employed for quality level of enlistees is the.proportion of applicants who are enlisted .into the military. The exception to this is the United States, for which the proportion of Mental Group IV 'enlistees.(the lowest group accepted) in total enlistees is the measure. Complete uniformity of definition was not pOssible because the U.S. Department of Defense does not compile a comparable applications series, and mental group data were not avail- able for the other countries. The U.S. measure is probably superior since it measures the 'main dimension of quality variation directly.Physical fitness and character levels can be expected to Change little 9p' in the short-run, whereas the Mental quality offering iand being accepted is'likely to be subject to more fluctuation. A difficulty in both estimates of the variable is. that we cannot distinguish changes in quality minimum standards from changes in quality offers. Verbal enquity indidated that there were no major official changes in minimum acceptable standards for any of the'countries-lover the peridd of analysis. But we must recognize a reluctance to publicly acknowledge',4 . by defense officials, and hence the possibility of some mis-interpretation if we treat variations as entirely due to quality offer changes. A For the non-U.S. measures there is the additioial complication that many of the applicants Who$do not become enlistees are not rejected', but,rather voluntarily withdraw or do not pursue their application: In Austr,alia, this . 19 happens to about 20 percent of applications on dverage. 2D In Canada the figure A a little over 40 percent. ,Thins proportion is troublesome since it is likely to vary with economic conditions,eas reflected in civililan wages and unemployment, and with changes in enlistment standards originating with the _services. The same can apply to the level of applications itself,, and the outcome is further possible simultaneiti,,bias. The effect of enlistment stand- ards changes will be to produce a "discouraged applicant" .effect, and it could operate quite informally even in per- , iodb of excess supply, where official minimum standards are not_raised but applicants become awaYe of a lower'probability yr of acceptance even if they meet minimum standards. The ,quality, level measures is still a useful and _At e. importantelement of the analysis however for, even'if its behavioral interpretation is not completely clear, 7' it is a ready indicatOr of the enlistments potential of deliberate changes in propqrtion of.applicantS (or Mental Group IVs) acceptable to the military i.e. the variable can be interpreted as an'instrument variable for policy analysis. 115 It is also essential to incorpatee this variable to acdount, even if imperfectly, forchanges in quality offers as they relate to military.anpower quotas.Thus we wish to estimate a supply curve.forvolunteers meeting I a specified minimum standard. But in peri6ds ofexcess demand or supply our observationsmay notbp appropriate to that supply curve. To illustrate thispoint refer to Figure 4.2. There demand is fixedat D* and the supply curve-for volunteers ofa pre-determined quality level,'is SS. A military wage-of WME would equilibratesupply and demand, and point.E would be observed:If WM1 > WME then,. other things being equal, the militarycan choose higher quality applicants from the resultantqueue under these excess supply conditions, and point A would be observed. . A- would represent a point on a,supply curve, S'S',for a quality level higher than for the originalcurve, SS. if WM2 < WME then excess;demand exists and the militarynay choose to meet its manpower requirements by lowering entry standards. This giv'es 'the observed pointB on the lower quality 1 vel supply curve, S"S". It is only with the inclusion of quality acceptance measure thatwe can infer the enlistment supply curve for a given quality level. other Variables The use of seasonal dummy variables for the quarterly / -105- '4 J I 7 1111L1't ART yttAGE aMD cwir OMR 2111ela A O 1 E I s" k TOTAL VOLUNTEERS Va0 Fldittia 4.2. TheeuALITY ADSUSTED SUrLY ctuRva s s , -106- data has already been discussed above. For the Canadian analysistregional duMmy variables were, employedk" instead to control for any influence'of differential taste factorg between regions.,Seasonal dummies were not relevant-for . the Canadian annual data. The remaining variabl.es employed relate to informa- tion about, or perceptions of, the nature of military life and military career opportunities,JUnlike most divi/i4n occupations, qua occuPation, the military bpends conSider- able money and effort onrecruiting This priMarily takes the forms of recruiting personnel and of recruitment adver tising. The intent is to improve individual's perceptions of the desirability of a military career and so produce a shift out in,the military labor supply curve in relation to military wage. It isnot necessary, or perhaps even possible, for such activities to create motivation for enlistment but.rather, given the limited information processing and,ettention and retention capacity of most individuals, to remind peo le of available opportunities, informthemof specificdetails of military life and stimulate an existing interest. 4 To examine, these effects is important both to improve over-all explanation of., enlistments and because recruiting effort is a potentially important polidy alternative to military wage changes in obtaini4 voluntary '.0 N . -107- enlistments. As estimates of recruiting effort we use either recruitment advertising expenditure (constant . prices) or'military personhel assigned to recruiting duties, both in relation to the size-of the recruit , population. Data could not be uniformly obtained for.all services 'of all countries, which limits our ability to make comparisons and renders our concluiions in this area more tentative than for other variables. This-is why reffuiting. effort has not been giVeh a More prominent place in the analysis. /- Empirical Results A total of 26' Ordinary Least Squares regressions were run for the four couttries:. 8,each for Great Britain, United - States and Australia, and 2-for Canada, along with two . additional joint time-series cross - section regreSsions for Australia. The regressions examined the4actof the specified independent variables upon enlistment supply for the army.and total defense, with different specifications ofthepay variable arid with the use of a distributed lag variable.' Tables 4.3 to 4.7 summarize the results in terms of elasticities.. Since a logarithmic form proved the most appropriate for all countries except the the',elaN.city interpretation was otherwiseimmediate. For the UiS., elasticities were evaluatedat the mean values Of-the variables. For the equations with a lagged dependent variable, elasticities are "long-run" elasticities calculated by dividing the estimated tivir a TABLE 4.3. AUSTRALIA, QUARTERLY, 1966(3)-1973(4) ELASTICITIES Or ENLISTMENT SUPPLY: . Recruiting Variable: Relative, CivilianPay Pay. Military Pay Unemployment- Quality Rate Acceptance. Pressure Tastes Draft., Personnel Rate sr, Equation Relative Pay Model , * 2.1. Army,Army* dynamicstatic -0.Q9 0.34** 1.12** . 0.02* : -0:001 0.01 4.3. Defense, dynamicstatic 0.220.25 -0417*0.170.36**- 1.6"0.93**1.14** '0.02 0.010:00 0.020'.040.03 0.01 H 6.5. Army, dynamicstatic Absolute Pay Model -0.95 0.0'9 0.37 ** . 1.07** . 0.02*. -0.17 '0.05' 0oa1 7. Defense, static 0.13 -0.02-0.30 0:19-0.38** 43.9"3"1.10** . 0.00'0.01 . -Q.11r 0.00 0.04 8. Defense, dynamic -t - value significant at 0.10 level' 0.01 -0-31 ** t --value significant0.19 at 1.01** 0.050.00 level -0.04 Z.) TABLE 4.4. GREAT' BRITAIN, QUARTERLY, 1966 (3) - 1973 (3) ELASTICITIES OF ENLISTMENT SUPPLY: \. Relative-- . Variable:-Equation Relative Pay Model Pay : Civilian Pay Military Pay Unemployment Rate ACceptanceQuality' Advertising Rate ' -1.52*/; I -1. Army,2. Army, static dynamic ' -1.24** 0.71**0.79** -0.07*-0.07 ; 3.4: Defense, Defense, static dynamid, -2.18**-1.58**. 0.85**0.79** 5. 6:Army, Army, static dynamic Absolute Pay Model -0.49-1.15 1.11**1.4-6** 0.89**0.90** -0:74**0.81** -0.06 .3 7. Defense; static Defense, dynamic -2.50**-1.73* 2.04*.*1.59** 0.82**0.80**' *. t - value significant at 0.10 level ** t - value'signifibgrit _at 0-05 lever . . ,. --. W er, , A TABLE O4.5. 'UNITED STATES, QUARTERLY, 1966(3)-1973(4) ELASTICITIES OF ENLISTMENT SUPPLY: EquationVariable: Relative Pay Model Relative Pay Civilian Pay Military Pay. Unemployment- QUayty Rate; Acceptance Pressure Draft -Tastes 1. Army, static r -0.28* , -0.28* o 0,29** .- .18** . 0115 a ` 9**, ,. 0.74** 0.25,** - 0.47** Q.43* 3. ,Defense, static -0.52** . . -0.39** 0.98** 0.05'. 0.28* -4::Defensp, dynaffic Absolute }.Pay Model - 0.28 *` 46 , -o.4p** 0.9**.: 0.66* 6.27** 49 475: Army, static 1.98 . . 0.09 -:-0.19 0.28** '0.18**. - . 0.18 6.-Army, dynamic .. 3.03 0.33 0.26 * d.44 ** ,-.. 0.2_9 ** 0.33* 7. Defense, static -1.43 0,45** -0,38** , ,0.980,0 ** - 0,05* 0.2**, . Defense, Iyarrtic . 1.93 - 0.09 , -0.32** . 0 ... .55** , , . N 0.07* 0.36** *1 . ** '. t `" Value Significant at 0.10 level -t - value significant at 0.5 level . % . , ...... ' TABLE 4.6. CANADA, ANNUAL BY AEGION, 1965-1973 ELASTICITIES OF ENLISTMENT SUPPLY: 40. . . . . ' Relative Civilian Military Unemployment Qual&ty , ' Rate,. ' .Varj.ale: Equation Pay Pay 'Pay Acceptance . . Relative Pay Model , % 1. Defense Absolute-Pay Model . ' ' 0:96** ' 2. Defense. * 1,37 -o.op 1.09** 4. \ . * t - value significant at 0.10 level TABLE 4.7. ELASTICITIES OF,ENLISTMENT SUPPLY: *t t - value sic gifipant at 0.05 level . . . AUSTRALIA, QUARTpAix. BY STATE, 1966(31-1973(n 1 RelatiVe Civilian- , Unemployment ! ,.., " , . Variable: Pay - .. Pay ,f , Military Ray" Rated ',Acceptanpe Quality, a ' 4 Pressure Daft Eguatlion' Relative Pay Model t A .. 1. irmy, static R .o.17. . 0:86 -0.004 Absolute Pay , Model, 2: ArMy, static ,, - .A2 n -1.19. , ' . 2.44** . 0.16 , , a e 0.90 0.04 i 't:1- value sicanficant at 0.10 level ** t - value significant= at 0.05 level ,) , ' . OP -112- 0 . coefficients by one,minus,the coefficient of 'the lagged dependent variable. The complete regression results are A- given as Apperldix Tables 4.1 to 4.5. The coefficient of determination was uniformlyhtgh- , rr, ,, . for,all'equations, ranging frow.87 to .99 which, while we'expect a reasonably high R2 -for time series data, is quite encouraging for a' ctoral series-in whidh most of Mk. the variable's are expressed as ratios or rates. Most equations were adjUsted for serial correlation.. This, too, is to be expected for quarterly time-series data, though. ,we note that, for the cases of equations without.a lagged . dependent variable, when the Durbin-Watson statistic pro- duced an inconclusive result at the-:05level of significance with regard to the presence of. serial correlation, we'still cbrrected,for serial correlation. This adjustment has -14tle bake in formal theory, but is common practice. The result,may be, however, .t00 under ?stimate the key pay, draft. and unemploymentelasticities,since this was the usual , observed outcome of correction, for serial correlation. Quality As regards the individual explanatory variablei, the . , , variable which is' uniformly the most significant in terms _ ...--- of the t-starstics the quality acceptance rate. It -.. L seems that much of thevariation' in,the enlistment rate is S accounted 'folk by changes in minimutt qualification standards,, . % , or the changing quality of laboroffering. The sign of the , variable is alwayslpositive,'as expected, and its coeffidient 14 -113.; . is estimated to provide an elasticity (for. Canadai Australia, and Britain) of around unity, as is also expected d,priori:' . Indeed,I.it might have been assumed that this coefficient Could be.clonstrained to equal, one: a one.percent.iriCreaSe):, in applicants accepted should lead to a one percent increase in enlistments. This is not strictly true, however, since various demonstration effects may accompany' changes in applicant acceptance. Given the egtent to which many young men hear about military career opportunities informally . 4 throug the.experienoes of their peers in applying for entry 0 4' .11 21 . ,t0 the military , a higher than average rejection'rate- may . well induce. a, change in 'the number applying for entry. - Thi effect could conceivably operate in either direction: discouraging some who fear they will not make the grade, and encouraging others who see higher rejections as evidence' of a more congenial and superior work environment. In the N. event; the net effect seems to be in Australia to encourage additional Applications at the levels of quality acceptanbe operative over the period, of analysis. The level' "of ficance of the coe ent is very high. In Britain, on .the other hand,-both short run andlong run estimated elasticities indicate a predominant discouragement effect under increasing enlistment standards and around the levels -operative fot Britain in this peiiod. For Canada no clear bias away from is discernable, and for the United States net discouragement effect seems to have operated with regard to mental group IV for entry.: O fe.6.771, Unemployment Another variable frequently found quite Significant in contributing to enlistment rate variationswas the- unemployment rate. The clearest results obtain for Great Britain, where the elasticity of the enlistmentrate with regard to the unemployment rate is uniformly estimatedby all 8 equations as Positive.and within therange .91, indicating,as was, expected,a positive effect of increasing unemployment upon enlistments. A similar effect is evident , for Australia, although the elasticity estimate 'is satinet (over the range .17 to -.38) with the higher valueswithin the range being more significant and more associated with army,than total defense.' .This bias towards higher elasti- t cities for army enlistment was also evident for Britain,,the explanation perhaps being that the.navy deliberately seeks to attract younger recruits direct from school for long- term engagement and the air force attracts higher quality recruits with good civilian alternatives. It is the army which, with short service terms..available, ismore likely to receive applicants in connection with inbreasing unemploy- ment. The lower absolute levelofel.asticity for Australia, is consistent with Autralfa's experience of continuedfull employment since World War II. The Australian unemployed'''. will have more confidence in being able tb obtaina job in the near future. This very fact warns against using the Australian parameter estimates for large increases in unemploymenteyond the accustomed (low) range, Where the . c. -115- 6 unfamiliar insecurity may produce a flood.of applicants to the military. The Canadian and American experiences require different interpretation. This is most understandable for the Canadian case, since the quality acceptance variable i,s the onlyvariable significant, even at the .10 level, in explaihiw:the enlistment rate. This conforms to the fact that the Canadian military is the 'smallest "(relatively). in the four countries being considered, and alpo the best_ paid relative to domestic civilian incomes. It seems that the Canadian military has long operated with an excess df applicants meeting minimum required standards. The result is, as has been stated, that "attracting recruits has posed no problem in Canada; and recruiting officers suggest that the number of erqist". . 22 'ments could be doubled or tripled with no difficulty. For the .same rev.son, theCanadfgregressionp provide insignificant estimates. for the pay coefficients. For the United States, the army-defense dichotomy is supported, but in an unusual way, in that the negative army elasticities are larger than the defense elasticities. The American results show that the coefficients for unemploy- ment are generally significant at the .05 level, and that they are usually negative. This is particularly so;.for defense, and the two estimates which are positive and insignificant are forearmy, implying perhaps that more individuals do apply to army as unemployment rises than,to ..the other'services. Thidi of course, does not explain the 17.7 (ti -116- anomaly of generally negative elasticities: enlistment decreasing as unemployment rises. The conceivable ration- 'alization is that as unemployment rises, those being laid off'first are not acceptable material to the military and are thus rejected. As unemployment decreases, on the other hand, more people may be willing to'quit jobs and investigate new careers than otherwise. And these people would be I likely to be of acceptable quality. But this shquld equally apply to Britain and Australia, unless American entrance standards became artificially high under a period of long resort to a draft. A recent literature typified by Hall and by Feldstein23 has argued that unemployment in the United States is not high duesto insufficient vacancies or job loss, but because of poluntary Separations and withaawals associated with the \secondarylabor market of women, youths, and blacks. In part these problems do ,not apply to Australia and Britain, because education is more vocation oriented with less emphasii upon formal academic qualifications. Also, the more consider- able unionization of labor in both Britainand..gustralia and a greater emphasis upon working conditions probably have meant less of a dual labor market than fob the United States, with a reduction in the annual high turnover volume of unemployment in the secondary labor market.. Finally, the structurali problems with regard to youth and minorities are less for Britain and Australia. 'Britain, 'for various reasons, does not have the same age structure problems..as the4-United States, and Adstralia has not had a similar miarity problem. -3.17-' Draft Pressure 1% The draft pressure variable applied onlyto the United/ States and Australia. The Australian result is that in 8 equations the'induction rate is foundstatistically signi- ficantbnly twice, and thenonly at the .10 level,-and in all cases the value of the elasticityof enlistment supply is 'quite small, though we notethat the coefficient is larger for the army (.01-.02) than for all defenseenlistment (.00-.01), as would be expected. These elasticityp4rametet /estimates reflect observations which includereduction of a draft to zero, so that the impliCation islittle draft - inducedenlis.Ement into the Australianmilitary--perhaps of . the order of 2% net increase inarmy enlistments over the period of operation of the draft. The result is not unexpected on a priori grounds, since theAustralian draft took,only a small percentage ofyoung men, and used a 20th birthday ballot which induced mostmen to take a chance on being diafted. Also there were few pay, promotionor occupa- . tional specialty benefits to be gained throughvoluntary enlistment as opposed to being'drafted inAustralia. The United States' parameters,on the other hand, yield significant estimated coefficientsimplying higher elasticities. The elasticities are positive, as expected, ranging from .21-7.44 for the army,'acco dingto which model is adopted. This is compatable with the survey evidence used in the Gates Commission studies for theirarmy estimates, 3 -11s- but the range of elasticity estimates derived for total defense enlistments (.05-.07) is much lower ,zuld*-4s Lkss significant than we would expect from thesurvey redioopses.- The surveys indicated that around one-third of totaX defense enlistments were draft induced. A greater proportion of volunteer draftees can/hardly be the-explanation of this, since that should bea greater effect for the army. The problems with Survey response and any'general problems of under-estimation bias should not affect army and total defense enlistments differentially. We do expt the draft-induced effect on total enlistments to be les an r the army, since the army offered shorter terms oi'service and greater opportunities for rank and pay advancements for the non-careerist, but the extent of the difference indicated in the coefficients still does seem large. It is a.gap however supported by the other available time series analyses, over different periods,'which also did not use the survey resultstto adjust for draft pressure.24 Tastes We assumed constant tastes for Britain and Canada, and attempted to measure changes in the average level of relative . tastes for the military in Australia and the United States using a public opinion 'variable which measured public attitudes to Vietnam involvement. In six of the eight United States equations the taste parameter was positively significarit at 0^. least at the4.10 level, and the elasticitywas estimated ,. -as being within the range .15-.43. There seemed no clear diffegencen impact between the army and defense. The implication is that'partiblpation_in VietnamA, actually encouraged n t enlistments4It shoulda remembered in interpretin the-magnitude 'of thiselasticity effect that the publicpinion variable fell to a base level defined by the samp.e reiPonse at the time the last Gallup question 3 on this topic was asked. The fall from the Vietnam period average res onse to the post-Vietnam base response implies 4K an average positive effectlof 3.9 per cent onenlistments. InAustraliathe public opinion parameter estimates' are not signifier in any of the eight equations, are not con-_ sistent in sign, and produce estimates of elasticit=y of quite small magnitude. This result is consistent with the differAq domestic experience in relation to the Vietnam- . war between the U.S. and Australia. In 'Austril6Partici- pation in the Vietnam war was exceedingly controversial from the beginning, even before conscript troopswere cam- .; mitted to Stvice in Vietnam. .The use of Australian troops= directly vi lated strongly held Labour Party foreign policy beliefs, anLabour opposition t8 Vietnam involvement was violent ands trenchant. There was not, therefore,.a period in Australia when service in Vietnam was not under question, so that patiotic m9tive s fbr enlistment would ,be consider-, z 44, ably dimmed Australian' experience in jungle and-guerilla - warfare inew Guinea, Malaysia and Indonesia also left few *ill . , . -120- public illusions as to ,the difficulties to be faced in Vietnam, so that any thoughts of adventurism in enlisting would also be reduced. Australian overseas service- 1 ; allowances and benefits are also quite minimal compared . to U.S. provisions. In the United States,public opposition td the war never really developeduntil after the 1968 Tet Offensive, and American recognition of the true nature of an insurgent civiliwar wad longer in coming. The result was a,period when patriotic, adventure and pecuniary motives would'join to encourage enlistment and so produce an average po'sitive' influence upon enlibtment: The exact level of this effect implied for the United'States may not, however, be 4.,that gi'Ven by our estimates,, since there is likely to be some collinearity 13tween'draA.piessure and ,the Vietnam public opinion ,variable.,The simple partial correlation coefficient is .77, and exclusioh of either the draft or taste variable in estimation does increase the_ !se of the remaining.coefficient and its statistical significance,, which may also be a contributing factor to the seeming under - .t estimation of' the defense daft induction variabl.e noted above. The alternative pay specifications tested were absolute pay and relative pay., The British'result6,here.are the -1 neatest. Thp relative pay coefficients are all negatively significant, and provide an elasticity of the order of (71.50. -121- The absolute pay coefficients ,are also significantat least at the .1 level for six of the eight equations. The signs are, as expected, negative for civilian pay and positive for military pay, and the associated elasticityestimates cluster around -1.50, with a tendency.fozdefense'elasticities to be a little higher than for army alone. The Canadian pay elasticities estimatedare of expected sign and of acceptable magnitude,but have relatively low t-values, for the excess supplyreasons already discus- sed. When an excess supply is maintainedon a continuing "- basis, a quality acceptance variable cannotadequately remove the idfluence of this situation upon the psychologyof -applicants for enlistment. Higher wages, for instance, cduld encourage more applications from those who had good civilian opportunities but at the same time may discourage applica- tions from less qualified individuals who knew gettinginto the military was difficult before, and would beeven More so now: In the United States, the relative pay coefficients are negative and significant at the .1 level or better. The magnitude of the implied elasticity, evalugtedat the means, ranges from -0:28 to -1.0. The absolute pay coeffi- cients are only significant in one case out of eight andhave the wrong sign for three civilian pay coefficients. A key problem seems to be collinearity between military and civiliin 4. p pay: The partial correlation coefficient is .85. The only major variation between the two pay measures came with the 1971(4) military pay increase associated with the transition to all-volunteer forces, and even this probably underestimated the impact of pay on enlistment supply due to a potential "errors-in-variabkeg" problem. The military pay increase represented the first competitive (as distinct 'from equity) wage adjustment in recruit pay for many years. Many young men may not have accepted'he as a permanent change in pay relativity. For Australia, not only is there a colline ty problem between military and civilian pay producing unstable and imprecise estimates of the absolute pay coefficients, but there is also'a problem with the relative pay coefficient estimates which have quite low t-values (the largest is' t = .47) and,'in two cased, the "wrong" sign.The problem here would seem to be insufficient wage variation. Military wages in Australia have long been directly tied to move- , ments in civilian wages. Changes in the national wage determinations of the Arbitration Commission, which affect all civilian wages, are also passed on automatically, and by the same amount, into military wages. Even_changes in indi= -vidual civilian skill margins awarded by the Arbitration Commission are incorporated into the military wage'strupture fdr comparable skills. _The only divergence comes with 114: -123- civilian over-award aria overtiMepayments (for which the military attempts to compensate with an adjustable service a. allowance) and with deliberate recruitingchanges in military pay., Again, as_for theUnited States, onlyone recruiting directed majorpay change took Place (1972(1))4 and its impact wassoon lost as the'new relativitywas not maintained, And civilianpay increases were permitted to catch up to ee-establigh he previous relativity'. Againt n6."permanent" change in military ometook place. , Another factor common tto bOth the ited States and ,s Australia as that -the major pay increasesor the military took ,place at a time when the public opinin variables. A Measured changes in the attitudes ofyoungme towards military most'iMperfectly.: The GallupPoll question ceased with Vietnhm involveMentexcept for two follow-up questions. Between the'end of the war and the follow-up g questions, linear interpolationwas adopted. Onwards from the time.of the follow-up questions,constancy of tastes was / assumed. 'Adverse reaction tothe military for a period after Vietnam could, however, havemeant a continued deter- ioration in tastes until' young'men of an'age for which Vietnam was not an ,important issuereached the potential applicant population. Fortunately;we have some extra sample evidande that income elasticities of supplyare higher and more reliable than these quarterly time-series,results for the "711 = d kited States and Austral," Amuld'indicate. First, earlier regression analyses on a qui, terli time-series basis for these countries over earlierperiods with more wage 25 variability do indicate moresatisfactory- results. Second, . . the British results for 4 -s,,',.-:-.:, peacetime environment are also encouraging, as we haVelseen. Third, two cross-section . time-series regressions were. un for Australia °ler the same data period and with the same wage and enlistment data as for the national time-series amdlysis, except that we were t - able.to'disaggregate the serifs by state. The results of these regressions were given bove in Table'*4417. the regression V . method was ordinary least squares with individual constant 44, terms, and analysisof covariance indicated ,that the-hypothesis of homogeneous slopes could not be rejected, but, that the hypothesis of homogeneity in intercepts could be -rejected, on the basis of F-tests at the 95 percent level of confidence. The resultant parameter pstimates indlcate a highly. significant negative coefficient with.elasticity of -1.48 for relative pay. The absolute ptr coefficients are also highly significant, of expected sign and of greater Magnitude than before: -1.19 for civilian y, and 2. 4.4 a military pay. ' Other Variables, The recruitment personnelsand advertising rate variables .py employed in the British and iustrali4n estimations did not produce estimates of coefficients significantly different from zero. It would be unwise to conclude that a ibro 'recruiting .11 6 4 -1256 ,d* effort: would not affect-enlistments. The insignificant coefficient estimates couldwell only indicate lowmaTnal effectivehess around prevailinglevels of effort. I may be for instance that a certain "floor" levelof activityis . .N, 0 .0 necessary to maintain publicawareness even Wbeyond thi; 7 . . point there are rapidly diminishing returnsto-additional recruiting efforts. The coefficients a nd levelsoE sigAlficance found for 'the seas 1 dummy variableswere consistent with the enlistment pattern that wouldbe expected-due to thetiming 61 the schoolyear. or' 'The enl4c-tment-termdummy variable employedfor Great Britain wat not highly signifidant, butdidlthiforMly indi- . . V pate as its parameter estimatea small negative impact upon" the enlistment rateas a resu- of introducinga new shorter en tment period. The lagged dependent variablewas notstatistically significant for the Australianestimates. It was signifi- cant only at the .15 level forBritish estimates', and quite , significant for the United Statesequations. This result is, consistent with our, knowledge ofthe rapidity of 2t-Pstments in the labor markets of thethree countries, with the AuttraIian.case being one ofa very homogeneous and highly 0 . _ concentrated urban labOr'market,and the larger,more 'complex. . A and more heterogenebut.pritish andAmerican economiet'produc- 4t,t;: 'ing reater information and mobilityadjustment lagk: In 37 -126 -. eG h. .,, . , . .. . 'several.instances negative lag coefficientswere obtained, indicatin4.,that induced enlistments 'f.n one quarter may Come partly at the expenseof'laterenlistments. FEASIBILITY IN MANPOWER PROCUREMENT The.econometric results outlineddn.theprevious section can be usedto assess the feasibilityof all- I volunteer recruitment. There is, of 'course, no ctuestion about the feasibilityof draft procurement since this isa matter of legislativeor administrative decree. To analyze the volunteer enlid'tments forthcoming under various specified cohditions, the appropriatemodel must be chosen- in genera, l. the relativepay model for- army enlistments, using lag; ost appropriate. The lag would be less justifiable for forecadtingsince it may 'build in cumulativeerror, but it is valid fot comparative statics exercises. The army equation,is chosen because , conscription is usually for the arMle., The defenseequations were made in the, earlier,janalysis to permitcompar- ability with thCanadian results aria in order.to examine N draft-induced e listment impacts on,the other services. We can bring together the',chosen'dupply equationand the demand estimates given in dhkater 34to illustrate the conditions under wiiich a free military laboi marketcan he. cleared, -eria ful voluntary erilistments obtained, It4 assumed that payAs,the onli-;policy)variable. Quality :. 9 4 -127- acceptance and unemployment variables are set at their average levels over the period of analysis. The public ' .opinion variables remain constant at their 1973 values, and induction rates are set.at zero. The lagged indepen- dent variable is set at the desired enlistment rate to replicate a steady state position for the,required access- ions for the United States. For Australia we use the joint. crss- section time-series equation as Our estatilktor. The estimates reported are an annual average so that we average out the seasonal influences. .since all variables except-the relative Wage are specified, we can readily solve for the market clearing wage, and by comparing that with the relative wage appropriate to lower levels of manpower requirements, and assuminga constant civilian wage at its average level over the data period, we can calculate the increase lin military income required to establish an all-volunteer force at the spec- r ified levels. The results for the volunteer ac s requirements 0 derived in Table 3,4, and under the conditions spe fied, are given in Table'4-.8.' We note that other assumptions as to unemployment, tastes and, quality level Could alter the. required military income. A presumed return to normal tastes after an adverse Vietnam transition could be built* into the estimatet as could a policy decision on lower minimum acceptIOle quality levels. q A TABLE 4.8 REQUIRED MILITARY INCOME - STEADY STATE (Given Military Effectiveness level) Accessions Australian Accessions 2' RequiredIncome' Require& IncOine MixedForce. ($) Mixed Force ($) 1. 251,430 2162 1. 10,400 . 3349 Volunteer Force Volunteer Force 1. 133,110 3231 1. 4,480,:., 6263 2. 114,840 2957 2. 3,840 4772 , 3. f10,490 289.7 3. 3,360 4253 1. $U.S. (1970) p.a. 4 2. $A- (1970) p.a. TABLE 4.9 NET WAGES COST - STEADY STATE (Given Military Effectiveness LeV61). U.S. FORCE STRENGTH AUSTRALIAN FORCE STRENGTH 1 Wages Cost -Wages Cost2 Mixed Force Mixed Force 1.- 870000 1794m. '1. 40,000 134m., Volunteer Force* Volunteer Force 1. 804,750 2600m. 1. 36,000 225m. 804,750 2380m. 2. 36,000 170m. 3. 804,750 2331m. 3. 36,000 153m. 1. $U.S.(1970) p.a. 2. sik(1970) p.a. * Volunteer Forceg are differentiated by theirfirst- term personnel to career personnel ratio. -129-, To compare the government budget cost implications an all-volunteer force with those of 'a force using draft, (the associated military income figures should be applied'to tithe respective force strengths to find total wages cost. The mixed-for& will have more men, but a lower required income. The net outcome, of course, depends upon N./ the asses level of pay under a deaft, and the form all- voluntegr pay increases take, e.g. an enlistment bonus; a graduated absolute. increase for all ranks, an absolute increase for all ranks, or a fixed percentage increaser for all ranks. Adjustments would need to be made for tax effects on gOvernment revenue under the alternative eystem7 and for non-wage costs hat may differ between the pro- curement systems (e.g. materiel and other supply and travel costs). Afuli-steagystate analysis will-also .incorporate long-run seniority and retirement pay effects. A comparison Iihich calculates net wage costs 'only, for the force levels given in Table 3.4, is given here as Table 4.9 by way of illustration. 'We assume a constant' absolute increase for all.army personnel. It would also be necessary to take account of the payment of higher income to the other services if pay uniformity is demanded, though on economicrounds it is more efficient for each service to set its own market-clearing wage And to minimize the payment of economic rents to,the other services. It is apparent that, while feasible, all-volunteer Ial forces may usually be expected to cost more in budgetary outlay than mixed forces. The strength reduction made pdssibiadera volunteer force will usually be more than 0 offset by pay increases required, although in,-some cases J the.size of the non-effective force difference between the 14systems, and the elasticities ofsupply may render at volunteer force even cheaper-than a. draft. Of course, under a draft system the military wage paid.can always be reduced by administrative fiat, thus brinng budget cost,below that for a volunteer force. It has often been comic O practice for some countries to pay draftees than v6lunteer recruits, although this was not a system adopted by Australia or the United States. V 42 CHAPTER5:;EVALUATIONOF ALTERNATIVE PROCUREMENT SYSTEMS "The least evil, in case seamen be wanted,' is to give them such wages as will induce them to enlist voluntarily.-Let this evil be divided among the .whole nation, by an equal tax to pay such wages." Benjamin Franklin, Remarks on Judge Foster's Argument in Favor of the Right of Impressing- Seamen; 1762 One is led'naturally from consideration of feasibility to evaluation of the desirability of an all-volunteer system as opposed to the draft alternative. A range of criteria' can be advanced for such a judgement, extending from issues c of economic efficiency, through equity, to concern for the prevention of a military takeover of government.A meaning- ful assessment of a draft vs. a volunteer system does require statement of the major issues that have been raised.We attempt to do this and to provide an appropriate context for decision. But the major focus is on elaboraig those topics for which economic methods seem especially appropri- ate, viz. the criteria of allocation, distribution and flex- ibility. It is to these that initial and detailed attention is devoted before turning.to those other issues which, with- 0 out'being any less important, seem less amena e to new insights through economic analys. The evaluation is advanced specifically for the situa- tion of manpower procurement for a peacetime professional dr* ( -131- standing military. The country is assumed to not be involved in a majbr war or%to be faced with a perceptible threat to its territory. The balande of advantages between procure- ment systems may well change with a shift to a morehostile military situation. In the dimension of distribution, for instance, what maybe a highly unequal distribution of burden for a peacetime military could become both fair and admin- istratively convenient when full-scale mobilisation is called for. It is believed that the framework of evaluation advanced here can be adapted., if desired, to analyse these alternative strategic situations. ALLOCATIVE EFFECTS We commence evaluation with theallocativeefficienCy aspects'of the alternative procurement' systems. This is an area conventionally the province ofeconomic' analysis. It is also ;an area where thepresUmption tends to favor a volun- teer system. Much of neoclassical theory is devoted to demonstrating the correspondence betweencompetitive markets and (Pareto) optimal allocation. It is not surprising there- fore that we take the volunteer recruitment system as the reference base and consider allocational losses thatarise if there is intervention in the military labor marketthrough Few counter cl ims are made for a draft onalloca- a draft. 4, tional efficiency grounds. Those.who support a peacetime draft tend to lay their emphasis elsewhere. t 414 -134- - Before we consider the worth of such alternative cri- . teria we must be fully informed on allocative effects that we may wish to trade-off for other advantages. We distin- guish four typeof allocative effect: turnover differences, 1 -- 1 substitution and' monopsony costs, uncertainty and avoidance effects and pre4rence abrogation problems. We examine these . , . effects from the viewpoint of comparative statics, and with reference to the recent dr.aft experiepce of Australia and the United States. The concern is inevitably with the problems of a draft here since our criter on for- allocational,effi- ciency is the competitive maet outcome. Labor Turnover; jWe refer he e to the effect of alternative procurement systems on the accession rates required to maintain a given .:f ,' combat capability- It was demonstrated in Chapter 3 that a' volunteer force ffquires considerably fewer accessions to maintain given Mi itary effectiveness. Tfie advantage derived from the longer term,of service of volunteers and the lower proportion of non- ombat related postings required_in.such a system. The allocative exprestion of this difference-is the civilian production foregone, without gain in military effec- , 4- n by ado tion of a drIft system, If we.aSttilie'the -4- same earnings potential for military personnel- as for s= larly qualified civilians, we can readily-calculate the , =135- foregone income for the increase in the "non - effective" force strength under a draft.s Assuming wage equal to marginal value product in the civilian economy, this loss has been calculated elsewhere, by way of illustration, as $A 19miNon OA (19.70),Iand,fortheu.Sciraftprior to the Vietnambu),$d-up, the loss has been estimated at $796 million(1970).2 There is another cost that could beassobited with the 4 high turnover of manpower -under a draft system, and that is I the contribution that such movement in and out of the forces makes to frictional unemployment.. Apart from the obvious induction and reestablishment lags, necessary as a matter of logistics, there is also a problem for veterans in fore- going several years of civilian work experieAce and positions on promotion ladders in internal labor markets, aswell as other training and education. Despite preferential hiiing si of veterans by the government, the result ha,.-been-tradition- ally a significantly higher unemployment rate for veterans than non-veterans,.and hence an increase in the overalllevel of unemployment. This is seen 'in Table 5.1. We should note that veterans do havea'greater incentive for prolongation of job search by virtue of more comprehen- sive unemployment insurance compensation--but an offseton' A the other side would be the expected employmentdifficulties ti of thosenon4eterans who had been rejected for military service due to failure to meet militaryenlistment standards 7136- TABLE 5.1. EMPLOYMENT STATUS OF VETERANS AND NON-VETERANS -U.S. MALES, 20-29 YEARS OLD. 1969-1972 (Numbers in.Thousands) 20 to 24 years Total, 20 to 29 years Employment status 1969 1970.197-1 1972 1969 -1970 1971 1972 ALL RACES: Veterans vilian noninstitutional population-- -1,5731,795 1,9531,935 2,316 3,4364,057 4,538 Civilian labor force 1,4361,621 1,7361,7522,152 3,1873,714 4,206 Labor force participation rate 91.3 90.3 88.9 90.5 929 92.8 91.6 92.7 Employed 1,357 1,4701,5241,5662,038 2,9683,388 3,898 Unemployed 79 151 212 186 114 219 326 308 Unemployment rate 5.5 9.3 12.2 10.6 4.5 6.9 8.8 7.3 Not in labor force 137 174 217 183 164 249 343 332 Nonveterans vilian noninstitutional population-- -4,729 5,024 5,499 6,0398,521 8,885 9,39110,007 Civilian labor force 3,774 4,058 4,448 4,942 7,405,7,7368,143 8,702 Labor force participation rate 79.8 802 804, 81.8 86.9 87.1 86'.7 87.o Employed 3,584 3,732 4,026 4,5107.141 7,2697,549 8.113 Unemployed 190 326 422 432 264 467 594 589 Unemployment rate 5.o 8.o 9.5 8.7 3.6 6.o 7.3 6.8 Not in labOr force 955 966 1,051"1,097 1,1161,149 1,248-1,305 . Souice: Manpower Report of the President, 1971, 1973. s- , _ D -137- O and who are thereby channelled into the high unemployment secondary labor market-in the civilian dual -labor market structure. With the end of the Vietnam commitment and of the draft, and with the generous funding given the Jobs for . ,Veteransprogram since 1972 (including one -to -One- training), the unemployment rate fRr veterans is beginning to approxi- mate that for non-veterans for the first time in some years. There are also uncertainty costs that contribute to frictional unemployment in the presence of a draft, and these are the unwillingness of employers to hire draft-liable indi- viduals and the unwillingness of individuals to commit them- delves to occupatiOnal and educational choices until they are' certain as to their draft position. In a 1964 U.S. survey, 20 percent of enlisted personnel interviewed indicated that they were told. they cauld-hot be hired becuse they might be drfttd. In answer to aseEaratequestion, 21 percent of enlisted personnel indicated that they had difficulties in career planning and life-choices because of the uncertainty as to whether they, would be drafted (Table 5.2). The arguments just considered tend to indicate that the: _operation of a draftsystem produces more frictional unem- ployment than a volunteer system would. But whate,if the problem is deficient aggregate demand causing.unemPloyMent Then it may be argued that a draft operates as a system of "public. employment" for young men, and so reduces their level -138, ,TABLE 5.2. DIFFICULTIES WITH EMPLOYERS AND CAREER,CHOICE EXPERIENCED BY ENLISTED PERSONNEL PRIOR TO M2LiPARYSERVICB Educational level Age All Ethic- . High School Some College of tional Levels Graduate. College Graduate Entry Combined or Less No Degree &.. . Per cent who were told they could not'behired because they might be drafted Difficultyin employment - All agesa, 20% 40% .17-18 years 11 11 19-21 years 27 . 25 34 ,22-25 years 39 34 47 45 Per cent of men wh had difficulties becaugethey were uncertain as to ther they would be drafted Difficulty from draft - ,*certainty All agesa 21% 16% 43% 17-18 years 8 8 15 19-21 years 28 24 4 b 22-25 years 54 49 66 . 69 a Includes small numbers Of men who entered service b over age 25. Insufficient data to warrant separate presentation. . . . , .. . Source: U.S. Bureatiof Census, Current Population Survey, October 1964, as reported by Harold WoOl, "Selected Tables from Surveys of the , United States Military Age Population, Oct-Dec: 1964", in:N.A.B. . Wilson, (ed.), Manpower Research, London:EnglishUniverities Press,. 1969, p.245. H. aq -139- of unemployment. below that which would prevailwith an all- Volunteer military. Indeed public employment of this form, -with its compelled employment at below marketwages, can ...- avoid the problem, often associated with'other publ,icemploy- ment, of its fundfhg merely replacing other employment to , c which that fin#nce wId have bee deVoted. In this case the same funding, or 1 is used to employ mare people than would be the case with the .11n1eer alternative"! even though the'coSt of that 'voltinteer military is itself reducedas unemployment rises. Charles KillingsWorth has argued that as much-of the post 1964 fall in unemployment is. due to the vied fortes build-up as to the 1964 tax cut.4 iSubStitution vs. Monopsony Costs. The second category of allocative losses was the'incen- tiveoiferedby the apPirent'cheapnessof military laboi under the draft, to misallocate resources in a labor inten- sive direction. This effect, of course,. is only of impor- tance to the extent that political,and bureaucratic decision- 0 makers respond to price effects. To the extent that they do we can i9J.ustrate the welfare loss that would result an Figure 5.1. , 'Y - The DD curve is assumed to represent the,.marginarry social ,, value of military labor. SS is the supply curve of labor to the military under a draft,,and'S'S is thecoiripetitive Tree , market supply.curVe. The free market level.of employment is , --, -140 - % Yi St WhGE , W3 va. WiS 14 V EMPLOYMEN1 .FIGURE 5; 114% SUBSTITUTION - NDER CONSCRIPTION I 1 s, 4 I , 4141- 1 .L2 at wage w2, wheras the draft level of employment is L3 at wage wl. ,.143 is. the wage that wouldbe required to attract' voluntarily the with7drafi supply. of L3. , - With linear demand and supply curves, the substitution loss equal 1/2*43-w1)(L3-1,2), by the rule for the area of.,a triangle.5 Since (W3-wi)L3 is a measure of the gross subsidy value of conscription for force strength L3, we can simplify. ,1 .the welfare loss S = 1/2 - ( 2/2L3) - (1) This expresst n ileadily permits representation of thet substitution loss as a proportion of the gross subsidy value iloof conscription sand as a function of relative manpower demand: L .00 .25 .50 .75 1.00 3 2 .50 .38 .25 .13 .00 . - Any such welfare loss occasioned by the bel-market price of labor,_ however, must be set against the welfare loss that would accompany a fdll-volunteer force, if the: military acted as a monopsonistic,purchaser. The military is the nation's largest single employer, for both Australia and the United States, and it is in a position to recognise that the .--) \ . -supply curve of labor is,hot perfectly elastic in a free labor market. There is inter- service rivalry, but it does -142-* snot extend to competition over wages and other pecuniary A _remuneration, so that the services are bound together in purchasing labor. Unless wage discrimination is permitted/ as with a variable enlistment bonus such as is currently paid to combat specialty enlistees in the U.S., monopsonistic purchasing behavior is A distinct possibilit, The position is illustrated in Figure 5.2,which incor- poiates an additional supply schedule S"S". This new:sched- ule Is the marginal supply curve, reflecting marginal wage cost as recognised by the monopsonist. A military constrained to competitive behavior would employ_0L2 at w2, but a monop- sonist military would restrict employment further to OL1, at wage wl. The monopsonistic welfare loss is given by triangle AFG. The relatiVe size of the two welfare losses depends upon the exact form of the demand function and the supply schedule.6 We do have some quantitative knowledge of the supply curve,-but what of the demand curve? In the absence of comprehensive and publicly available measures of military effectiveness (outui) this question cannot be answered categorically..However it does seem that ,existing institutions and procedures may not be _such as to foster economically efficient resource allocation, and manage-, ment--and, Indeed, may well impede it. While lacking' detailed institutional knowledge we may well illustrate this rot point for labor demand by.referemce to a recent official -15-1 -143a A 4I MONOPSONy WAGE io W lit-FhRE LOSS. 4 1 ta 1 I 1 I 1 t 1 1 I I LL EMPLOYMENT Fiwte 5.2. THE MONOPSONVWELFMCe LOSS ut4oca, OLUNTARI 1%.1 -144- Outline for Britain, entitled "Forecasting for the forces: Manpowerp.lanni4in the Ministry of Defence" (Dept.of Employment, Gazette, Jan. 1974): Manpower planning which is essential for both service planning and long term costings purposes, is required if the objectives of defence policy are to be achieved. The first step in the planning of manpower is a translation of this objective into manpower demands. Piesent and future commitments . requ4'e .;,particula;leyel8Af_milj.tary0capabilipyl,, , 0 ,440 which is converted into elements of army, naval or air-force presence such as battalions or squadrons and their equipment.... The detailed process of forecasting manpower - follows the same broad pattern for all three serv- . ices. By way of illustration, the operational 4 steps for the Royal Air Force-are as follows. Squadron, patterns for a ten-year period are produced. These are broken down into.numbers of established posts through the application cif scales related to the amount otactivity..... When -the sequence of'converting commitments to a multiplicity of forecasts of actual posts is . completed, they are aggregated to a total demand forecast analyzed by trade and rank....Having arrived at an estimate of manpower demand, the rest of the planning process lies in considering.how to meet it. We note the'following with respect to these planning arrangements: 1. Failure to consider substitution possibilities between Services, between capital and labor and between different . types of labor; fixed coefficient requirements determination is implied throughout.' 2. Failure to relate requirements. planning to costs; costing is left as a separate (civilian and clerical)operation. 3. Failure to integratesupply and demand analysis; A manpower requipementspolicy is separated from and priorto dif -145- personnel (supply) policy with no provision for interaction: It is only when total require- ments are aggregated into Service budgets that there is a general concern for costs,_ and then something has, to give: presumably military requirements. The likely outcome is for cost factors to produce gross adjustments in force structure (and hence unanalyzed risk with regard to, the feisibility of 4 tobjectivesltrather.tha4 td re-allocalte.redources Withieta g a force. It is likely then that military manpower demand under . current bureaucratic systems may be relatively wage inelastic-r except perhaps for very large shifts in the relative wage if these were to accompany, say, the adoption of an all-volunteer fdrce. Such a system change could induce management review of substitution possibilities for reducing military manpower requirements. But otherwise the scale of adjuStment to -1 factor-price changes may well be sr#11. As R.W.- McKean has put it, .such price changes "would nit-give any official new rights to take-home rewards forgreAer efficiency.... In other government agencies we alreadthaVe a volunteer system, but it is by no means clear that efficient combinations of land, labor and capital are typicallyselected.° In all it seems that with. mondpsony and substitution losses operating to offset each other,and with the demand curve for labor possibly quite inelastic, the allocative losses in this second category-are probably quite small. Preference Abrogation. Turnover welfare effects were associated with a shift in the demand curve as between volunteer and draft procurement systems. Substitution and monopsony costs arose in connection with an elastic demand curve for labor. A third category of allocative 'costs can now bd distinguished if we assume labor rand fixed exogenoutly, and examine instead the significance of theabor supply curve for evaluating the allocative implicaons of a draft. A 4 t .1444 s.n _. I . ti $ 1-111 t $1 The supply'curve of military labors incorporates both -L the alt native worth of resources to the civilian economy afiet tastes for military service. Accordingly, a measure of welfare loss due to coercion under conscription isgiiren by the difference between the set of reservation prices Of those in the military under a draft system. and the lowest set of reservation prices which would generate the same number of men meeting military entrance standt.rds'in the absence .of a draft. A narrower definition,proposed by W. Lee Hansen and Burton Weisbrod, and also by J. Ronnie Davis and Neil 8 Polomba, is the difference between the current foregone civilian opportunities and the lowest civilian opportunity cost consistent TriltA-th-glame number of men. This defini- tion strips the supply curve.Qf utility and looks only at productivity. But it will be remembered that itlt is the .pursuit of "utility;" as individuals themselvessee it, that is.helt1 to be the whole point and justification of a voluntary system. Production i6 not pursued for production's sake. It is undertaken to meet the basic material requirements -147- of life and, above that, to cater to people's own subjec- tive views of their wants and needs. The belief is that these desires are best catered to by a,system which permits free choice by individuals in consumption and production. Since conscription involves denial of free occupational choice for the period of service, it is appropriate to .t 11 ix s t4JO. s Si 14 Iit ft 1 A 0 AllAt ** sky v 4 stress-the utility-fosses that. result. This notion of pSychic losses is at tilt heart of.economic organisation and is not to be, considered less "real" than argument in terms of direct material production. It is not production, but the "satisfaction " we obtain in' production and from production,that is to be regarded as relevant'and real. Accordingly, it is preferable to retain the broader defini-. tion of welfare loss that has been advanced. To illustrate this welfare loss conveniently, let further assume: a lottery draft,a linear supply curve of labor, and no draft induced enlistments. The situation p ispictured in Figure 5.3 where the eligible manpower pool is L3, the exogenous demand for military labor is'L2, and the volunteer supply of labor forthcoming at the offered military wage, W1, is Ll; (L3>L2>L1). The draft require- . ment is thus L2 -L1. If L-L is randomly conscripted, the net cost to 2 1 individuals is the frction (L2-L1)/(L3-L1) of the area 1 under the supply curve above the prevailing military wage. The triangle ACD represents this fraction. The triangle c. -148- - , ) tt All. C 0194101MH OM AM, AM ...... a AA MA AM MA AM 00 INN OM AIM MA AM AS 1 1 14 Ca, 1- 3 gMPLOYtitt4T F1G RE 5.3. PREFERENCE MR00411014 WELMI.E. COST tAltiER Rikt4t;i014 cotAscstipttot,* -149- ABD represents the minimum feasible cost of conscription- an linount that would prevail if minimum supply price'iden- tification and conscription were 156ssible. .41, draft board system with provision for exemption from service where, an individual can contribute more ubefully to "the national interest" in civilian endeavors, has elements of such an identification process - but it ignores the disutility element and focuses only on a vague (social) productivity criterion. The welfare loss involyed'in random conscription, then, is the utility cost in excess of that which would operate with minimum supply price provision of the required force strength. This is triangle BCD, which is represented by W = 1/2 (w2-wl) (L3 -L2) (2) L i.e. 3 1 (w-w ) L 2L (3) 2 1 2 2. 7 The expression W/(w-w)L is the welfare loss asa 6 2 1 2 proportion of, the gross tax subsidy value of conscription (the savings in budget outlay for a volunteer force of size L. Stated in this way, the welfare loss from lottery con- scription is a function of relative manpower demand and can be given asi r .01 .25 '.50 .75 1.00 W 49.50 1.50 .50 .17 .00 . ' We see that the larger Igmilitary manpower demand relative to the eligible populati,oh, the smaller is the random con- . scription welfare loss in proportion to the gross taXsub- sidy. The-latter increases more rapidly than does welfare loss, as relative, requirements increase. This model,apprOximates fairly closely the Australian draft s#uation over the period 1964 to =1972. There was little evidence of draft induced enlistment, the begt,fit supply Curve was linear -and conscription was by lottery ballot for which all males turning twenty were eli4tble. Deferments were available, but they did not become - exemptions, so that randomness in induction was maintained. The relative resource.requirement over the period 1964 to 1972 was an average annual military strength of 45,000 17-24 year old males, which represented,13 percent of 17r24 year old males meeting military enlistment staniards;. i.e. L2 /L3 = .13. Using equation (3), this figure implies an annual welfare loss 3.34 times the gross tax subsidy provided by the draft system then in operation. The tax .- subsidy can in turn be calculated,, say, for the reference . year 1970 as: (4863- 3354)45y680 (w2 -w1) L2 = $A 69 million t'-whpre w2 is the annual military income that would bring forthiNificientvoluntary accessions to maintain a steady -state force Strengthof 86,180, including 45,680 17-24 year olds. wis calculated from the supply function using an 2 income elasticity of 1.48 and replacing 16,000 conscripts. The total annual welfare loss resulting from conscrip- tion's disregard for the individual preferences of conscripts was thus ofth8 order of 3.34x 69 = $A 230 .million (1970) per annum for Australia. A lottery draft is not the only,form conscription can take, and welfare,costs willvary withthe system of conscri on, as well as with manpower requirements, military payan4kkhe form of the supply function. A Simple alterna- tiveto a lottery draft would be for the government to issue draft notices to,all eligible persons, but to sell,,exemp- tione at fixed pric. Thus in Figure 5.3, if the government required -a military labor supply of L2 it could set the price of exemptions at w-w Those with a supply price 2 l' .belowWwould choose not to purchase an exemption and so ! 2 , would be inducted, oryolunteer if their supply price.is, t _below wi. . .In addition,. however -,there would be individUals with a - retervation,prices above wz.who-would not have the funds . ,. to buy her exemptidn. Only,, if the sup .ply schedule repre- , - ., sents the amount each individual is willi g to 'Daly to avoid military serlice, wilkthe representatioin Figure 4:3 be an,equilibrjmiWNsolution for. the personnel requirement' -152- L Otherwise a rationing device, or lowering of the exemp- 2' tion price, will be required to obtain equilibrium. In some respects it is possible to View the U.S. Selective Service system as aiform of the exemptioh system. Certainly Selective Service did not operate in a 'completely random manner since, by, bearinq.cbsts, it was possible for various groups to avoid the draft. These costs took the form of continuing in school, entering an exempt occupation, marrying and becoming a parent', emigrating to Canada, paying legal Costs to fight induction, incurring disabilities; etc. The analogy with a fbrMal exemption system bre.aks down, in that that there was no single fixed cost which could be paid to avoid the draft. A more realistic model would incorporate the probability of.being inducted as a declining function ofthe cost incurred to avoid the draft. However it is difficult to proceed too.far in this direc- tion since, as well as the problem of specifying empirically such a cost function and a supply function, the apprbAch suffer; from the problem that maximum willingness topay ti cannot exceed, but may fall short of, supply prices given a by the estimated supply function, due to non- coistant mar- dinal utility of income and also tocapital market imper- fections, which prevent the acquisition of funds with which;' to seek to purchase exemption. It might be thought that -to use instead the distribution. of civilian earnings as the supply.durve might solye the problem, but this only runs i 3 I -153- 4 r into the difficulty that, while It would bean indication of ability, to incur costs, it would dot measure willingnessto v. :4 do so. Of course, to continue to employ direbtlSuPplyItinCiion' estimates of the welfare loss for the U.S,,:with Selective Service, is to bias the cost esfpimate upwards, since the major component of non - random `!,"election is- the ability of the College-educated to avoid ,sekving in,the military in the same proportions as their'Aon,:Collegepeers. Larry Sjaastad and Ronald Hansen hav'e nevertheless' -tried to esti-. . mate this welfare loss, and allow for this -bias, by assum- ing that, for college graduatls, income an0Upply order- -ings are thesame, and by setting up for collegetsti'aduates - = , a constrained function.relatirig the probability of entering the military to position on thL income scale.9 The esSuinp- L A f tion of random sele.ctio s retained for persons of lower education-than the college group, including reluctant volun- . teers. This estimation procedure implied welfare cost, due to conscriptioh's disregard for individual preferences, of $1,080 billion (1970, using a constant-elasticity.asiNmp- A ; tion of 1.251 tcompatible with iestimates; derived above). ,.,-, ...... _.. This estimate is'the.Sjiastad-Hansen estimate of the. difference between the set-of.Jsupply priced, for draftees and reluctant volunteers ptd their military-earnings, less . an estimate for theequivale4 loss forminimum supply piice 4 10 4 conscription. Making this -latter adjustment gives an V ,1 l' i : :,a. '. .;*' i ;a I p -154- estimate of welfare cost due to'cOnscription's disreciard for individual preferences, insofaras it is in excess of 'tithe minimumloss compatible with the manpower' requirement: In this way we, measure here thepure allocatiire welfare . The welfare losses that wouldaeztain for draftees:- under minimum supply price conscription(whose allocation,- equals that of a voluntary market sol4ion),willbe considered, along with economic rents foregone, under thediscuSsion of distri ive cos The adjusted SjaaStad-Hansen estimate is best considered , a,'very broad order of magnitude calculation only, b.itthe' general -point is eviddnt: thereare substantial welfare ;'losses due to Conscription's inabilityto adjust well to m* individual preferences. And whatever the accuracyof the estimates, this conclusion followsas a necessary matter' of logic given certain basic assumptions. All that we need to recognise ,is that'voluntarism is,self.-seleoting,and that a volunteer force will attract those individualswith . the lowest supply prices,consistent with militaryrequire- e ments. On the other hand, ally form pf draft (other thAf. 1 Minimum supply price conscription) wi4llinclude many young men with remunerative civilian employment,opportunitles . or with astrong distaste for military-life. Entrance * standardswill ensureit does not includemany with low civilian pibducfivity, and those witha strong taste for "PO% military life will already volUnteered.11 1.4 I" 100 0 r. A. Uncertainty. and Avoidance ' The final set of allodative costs that arise from the pregence of conscription derive from the uncertainty... :of being drafted and from attempts to avoid or postpone being drafted. r Some of. these costs as they related to employment 4 . . ., difficulties for both employers and employeeswere%. noted earlier in this chapter and illuit'reted in Table 5.2. Similar uncertainty impacts upon education. decisions can ,, similarly be/documented. Tn a 1970,survey of Australian .i'.r. 0 university'students, .fi peicent of young men of-ballot age ;.. Said that they had deferred.makin4 important education decis.ipns until their ballot result was known. Of those students not yet of ballot age; 15 percent indicated- that they were deferring final career decisions until the ballot 12 . re.sultd. were known. Avoidance effects arise from the incentives provided bye the existence of the drafts.andits partiquiar rules of ,- . _ . operation, to escape the burden of military service. Indi- , viduals'make decisions they would Rot otherwise make in order to avoid being conscripted. The spectrum of oppor- . iunities will vary with the system and can range from becom- . ing a theological student to delijoerately inducing medical conditions, developing minor Criminal records or fleeing the country. Even the offer, of postpbnement' of obligation to serve, asoppo4 sed to likely exemption, can produce -156- ti - 1. significant dikferences in patterns lof choice. 'The whole probleM of conscientious objecAlion anknon-compliance, of *0 course, owes most of its exstenceto the conscription system. : e . . 0.. ...vAn indication of the nattietalad extent of, these effects can bt given by looking a little. more clodely at two of them: student, deferments and marriage exemptions. With student dqferments, in Australia, whileno exemptions were avilable, deferments were, so that there was lill an incentive for some young -men to postpone military ser- vice and to continue training when they otherwise would not; perhaps in the hope that conscription might be aban- doned by an alternative government or its length reduced, because their training will ensure better military postings, or simply to put off something they find distasteful for as long as possible. The 1970 Australian student' survey .found that 14- percent of.post-graduate students considered National Service a'factor in their decision to undertake. higher studies., It will be remembered that this applied at a time when only about 8 percent of those eligible for the draft actually served. 2. In the United .Statei student deferment became lmpor- , tant,in the 1460's when growth in the die of the draft- eligible' population permitted deferments.,to-become effee- . tive exemptions, particularly if pyramided into dependency deferments. The outcome was a relatively low military 457- participation rate forN-college men; in 1964 70percent of 4 high school dropouts aged 27-34 had served in the military as opposed to 17 percent of non-medical college graduates 13 with advanced degrees, The concern is, of course; an impOrtant equity'one, but there is also theallocational 41F issue of interference with free market choice. Some might see such an incentive.to continued education as a social gain. General Hershey felt that "a fellow should be.com- pelled to become better and not let him use hisown discre- , tion, whethei he wants to get smarter. "14. The General may be right. But if he is, itmeans ignoring individual preferences as our criteria for welfare evaluations.More- over, if there are felt to-be aeficienCies kh the education system's ability to meet the nation's schooling needs/, and this was not at all clear in the1960's, the question shoufd be asked whether,adding one more imperfection to the market is a mbre efficient way of improving the education system, than tackling directly other market imperfections, such as finance market inadequacies for investment in human capital. Some Additional non-survey evidence On*the draft's impact on education is given in Table 3.3. For the United -40 SAtes, male first -time collve enrollments,as a proportion of.18-24 year old mans, are related to trend, a student* deferrment dummy.i.Tariable, and variables, for draft pressuu and military casualty rates. It is found that the latter . 1116 UNITED STATES, 1946-1973, annual TABLE S.3. EDUCATION IMPACTS OF CONSCRIPTION: REGRESSION ANALYSIS AUSTRALIA, 1964(1)-1974(1), quarterly, (mean value) Variable Equationk 1 (t-statistic)EquationCoefficient 2 Equation 3 (mean value) Variable Equation 1 ,,equation (t-statistic)Coefficient 2 Dependent.Ttend(0.062121) Variable 0.00166EPR1 0.00161 EPR1 0.00156 TrendDependent(0.29453) Variable . 0.00156EPR2 EPR20.00161 Deferment(0.75)(14.5) Dummy .(2.271),(6.573) 0.00649 (2.560)(6.871)0.00745 (6.780)(2.295)0.049 Draft(21.0) (0.73171)Dummy (11.868)-(5.5055)0.0196 (2,568)(4.973)0.0218 Casualty Rate -0.00030 70.00015 March Quarter -0.0625'3 . Induction(2.39132) Rate (-1.184) --0.479 0.04788- June Quarter(0.26829) " (-14.254) - 0.00546. Constant(0.019686) (6.041).0.03024 (6.816)0.03131 (- 0.815) September(6.2439)(0.2439) Quarter (-1.2208) (1.1970)0.00533 Constant - (51.96) 0.26158 (20.767) 0.1993 R 2 .1:380.9561,-. 1.480.9302 .:. Durbin-WatsonR 0.9398 0.7966 purbin-WatsonNEPR1 = first time enrollments in college, males 28,, 28 28 104/poiaation, males.18-24.q, & *41 * 11 EPR2 = total school enrollMents, all Males/all malenotl.n labor forde. ' DataAllequations*No sources: are adjusted for serial correlation.Durbin-Watson statistic given by See Appendix. search program: ,i 111i- -159- -; - two variables do not contribute Significantly to explana- but that the studentdeferment dummy variable is quite significant and that it;-10ies a 12-14 percent increase in new .college enrollMents over trend, 1948-1973. For Australia, the'best-f.aalable data was for quarterly male enrollments in scnool as a proportion of males not in the labor force.:,.tfiis dependent variable was related to trend,seasonat!dmay variables, and a draft dumbly variable for the peri-0:1166 to 1974. The draft variable represents student defedent because such a defer- ment option was available forine whole period of the operation of a draft. The contbription, dummy variable was found to be highly significdhtiand implies an average increase ,in number of enrollments of 7-1/2 percent above trend. A regression on first quarter inewnschool,year) obseryationt alone did not altdr the estimate substantially--an estimated absolute enrollment impact ofta.0 percent instead of 7.6 percent. SiMilar results are reported in,Table 5.4, for the impact of conscriptiob upon the marriage rate. In Australia, married men were exempt from call-up during the // whole period of-National Service, 1964-1972. The regression of .the annual marriage rat for young men 17-20 years of age on trend and theannual induction ratf indicates a . significant impactfOrcondcription. In absolute terms, TABLE 5,4. MARRIAGE IMPACTS OF CONSCRIPTION: REGRESSION ANALYSIS., UNITED. STATES, 1962(1) - 1966(4) quapet34 (mean value) Variable (t-statistic)Coefficient (mean value) Variable AUSTRALrAi L962-1973,, ,annual (t-statistic)Coefficient Dependeht Variable Equation 1 MR1 Equation 2 MR1 Dependent(3.6517) Variable Equation 1 MR2" Equation 2 MR2 MarriageTrend(10,5)(0.02495) Dummy (Q.299)0.001680.00001 (-1.172)-0.00008 0.00216 TrendInduction(6.5) Rate (2.096)0.093719.298 (2.151)4.2430.09757 Induction(0.004572)(0.45) Rate (3.925) (1.596)(4.282)0.2216 VietnAl(0.5)(0.04925) Dummy' (2.185)' (0.9060)(0.6025)0.4389 'March Quarter_Juhe.Quarter(0.25) (-7.44)-0.00482- 0.00449 (-7.801)-0.00447 0.00502 Constant (8.304)2.585 (8.233)2.589 O0\ September(0.25) Quarter (9.695)(8.064) 0.00582 (10.31) (8.64) 0.0059 Constant 2 (35.96) 0.02253 (34.55) 0.02215 2 4 Durbikli0AsonR 1.700.9077 1.940.030 Durbin-WatsonR 1.500.6370 ° 1.73G.6707 MR2MR1N = groomsgroomsIunder 18-24/p6pulation'of 21/population malesofmales 18-24 17-20 20 20 N 12 12 DataO Sources: See Appendix -161- the average annual draft intake of 8,400 wasassociated with an average annual increase above trend of 1,800. marriages with grooms under 21. This may, not.measure a pure draft effect though snceconscription involved a high, probability. of combat duty in Vietnam. Multicollin- earity prevents effective estimation of the separate effect, so the result is bestinterpreted as the marriage impact of conscription involving combat duty. In the United States, fathers did receiveeffective -exemption under Selective Service but married menwithout children were generally inducted. The exception to this L'was the period 1963(3) to 1965(2), when President Kennedy placed married men in a lower order of callthan single, men. A quarterly regression of themarriage rate for 18-14 year old men, using as independent variablestrend, seasonal -dummy'variables aild.a dummy variable for Kennedyperiod of ermarriage deferments, found the marriagedummy variable quite sighificant and gave an estimate of an8.61,percent increase in the marriage rate. Inclusion of a separate draft pressure variable altered this estimated impactslightly to 6.7 percent. This latter lower estimate represents65,000 15 C: marriages per annum above trend over theperiod. Annual , inductions averaged 120,000 in thatperiod. More elaborate statisticalanvdstigations,perhaps 16 motivated by appropriate theory (e.g.,Becker On marriage, ) ti'7 2 would impe. theestimation of these effects. The use of trend,e4pecially,is a very blunt instrument. There may be ,important independent variables whoseinfluence varies sig- nificantl from the patt6rn implied by_a trend variab e. Thus, indudation, for instance, we would like to include the _ respectiv. eturns and costs to different.levels of education. However,' such data iS not easy to obtain: It isi simply not , available'-,for Autiralia, where income data with an education classifi4ition has only been available since 1972. And in the United States, appropriate series are also difficult to i-J obtain over the data period (1946-1973) of our analysis. -,;1'- AccordindlyI the .exact level of impact; be different from .4, ...:',. 1°- that estirated here. However, the general point seems clear: .. conscri on provides incentives forany individuals to alter , persona pnnng.i 111tdCaatS to ind0Olduals.of these altered choices is,' also evident fn general terms--both personally for the indi- vidual concerned, -'and fr4 the economists' allocative view- point, whee,it recognized that real resource costs are involved: The activities entered into by people to avoid - ( induction -are.,rseal costs tro societyand may even involve . furthernalities',as;-with, say, the impaet of young and precipitate or reluctant, mar0.hg'es on the children of those I unions. 4 ut a dollar-Value.on these costs is not easy, even nomist. One indirect method would be to develop - -163- the model discussed in the previOus section, which incor- porates a function for the cost of avoiding the draft. "Sjaasted and Hansen did do this in their estimation of real costs of the draft for the President's Commission on an7All- 17 Volunteer Armed Force. In terms of Figure 5.3., the estimation is of the area BDEF, if w-w is interpreted 2 1. as the amount spent in avoiding the draft.Under a variety of assumptions concerning the functional form of the supply function andparametiNof that function, Sjaasted and Hansen found a quite tight cluster of estimates of total uncertainty and avoidance costs, $3.0 billion (1970) for a pre-Vietnam size force as of 1964: Apart from further questions as to the empirical size and form of the induction - probability cost function, for which no sensitivity analysis is offered, this estimate must be treated carefully because the supply function employbd 0 is one measuring supply price, when the concept required is that of willingness to pay. This means the Sjaasted-Hansen estimate is an upper bound. However, even if the cost were onlyliaifof that estimated,Ithe uncertainty and avoid- ance costs of the draft would still impose an important loss on society, and that is in addition to the other allocative losses already discussed. Contcription, then, trough its inefficiencies and distortions, imposes a wide range of extra costs on society, Many of these costs are hidden and do not appdar in government 'Vt.1 -164- _budgets, but hey are nevertheless real, and while they are difficult to estimate, they would seem to be significant. The_preferen e abrogation costs alone would seem to exceed, the extra budget cost of adopting all-volunteer forces in peacetime, and the higher are those budget costs anyway, the higher real costs to society must be. Young men by their supply price position and avoidance actions reveal how highly" they value their freedom of occupational choice, and thereby reveal, equally, how much of a welfare loss is imposed under a draft: Voluntary or free market recruitment does not impose these costs and so represents a saving, not a cost, to society, in these allocation terms. Indeed, the more a claim is-made that an all - volunteer force is "too expensive" iii' peacetime,..the more it is implied that the economic welfap costs of using a draft are large. , 4 , DISTRIBUTIVE EFFECTS To discuss the diStributive effects of conscription ' we recognize that consCription'is a tax and we examine the magnitude and incidence of that tax. In examining this area we can only seek to outline the actual distrAbutional. implications of alternative procurement systems, and demon7. strate how thosedl'ttributionaloutcomes fare under various, equity, criteria. The major alternative criteria raised in discussion of military-recruitment are introduced, but the choice between them is' an individual value judgment. Conscription as a Tax Conscription is an implicit tax -in= -kind levied by the state and paid as insufficiently compensated labor for servicemen, both conscript and,volunteert By the use of compulsion, the state acquireS:7the labor services of a number of individuals, under tents unfavorable to those individuals. For the draftee and draft-motivated volunteer, the tax is the amount over and above the military salary received, that would have been necessary to induce free enlistment by the,same individuals 91, the absence of the. draft. *'For the true volunteer, the tax is the amountby, which current militarr,pay is lower thanit/couldbe it the force were recruited on an all-volunteer basis. In principle, these comparisons will include the effect of military service on subsequent earnings, and, ' . , , 1'7G .0 -166- ra in this context, At is often asserted that "the military trains individuals who may transfer their training and job experience and economic perceptions to their diviliari life, thereby enriching themselves, the economy andsociety."18 But there is little evidence to support this view. Military training and re-establishment benefits merely replace civilian , formal and on-the-job training and job market position that woul4 otherwise be obtained, and the net outcome seems to be tha there is little difference in future earnings between 19 veeransand non-veterans of otherwise comparable background, 4 once the initial "frictional" readjustment problems discussed earlier are overcome. For this reason we focus solely on income comparisons for the.period of activemilli.thry qervic.e. Interestingly enough, there is also substantial dummy evidence that military service experience has little or no effect on a veteran's attitudes and opinions as Well as ) . 20 income, an important finding for those who would seek to justify conscription on ."military service is good for you" grounds.. Under the definition adopted, the conscription tax may be seen as being composed of three parts.' One part is the foregone economic rent for true volunteers. These personnpl would have enlisted anyway, but undertn all-volunteer . system they would have received higher' pay. The true vol.... .,unteers are for. this reason taxed by the conscription system since they arecaenied the extrar income they would have .T received if recruitment were on the same freebasis as other occupations. ' It,might be, thought that incluSiorrofrentS renders the tax concept too broad, iince.rents, 4Dy their nature, involve no allocational change or loss and since true Volun-. tears are not compelled to enter the militaiy.' Some writers 21i have restricted their defini-, . such as Parrish and Weisser, . . . , tion of the conscription tax,so as to exclude rents foregone.. Logically, however, refusal' to treat rents foregone as a tax should require rents actuallcollected by other sellers of goods and services to the goNiernment.to bd treated as sub-- sidies. The norm, under a voluntary systemi,as that "sur- pluses, be they generated in production of consumption, are 4pAperly the property of the person to whoM they normally accruef122,Since consriptin is a coercion an an otherwise ' voluntary labor market syst it seems reasonable to accept' the norm and to trbat'rentforegone as. a tax, partiTlarly - since rents are retained.byIther seIleks of _goods aira services to the government. The remaining two compoents of the conscription .'ax apply todraft-affected indi'duals: draftees-and draft- induced volunteers. FOr.these individuals the tax comprises opportunity cost and disutility cost. The former is'the financial measure of the differende betwe- ilitary income 1 * -1684 and foregone civilian income.- This is likely to benegatikre since militdryenliStment standards reject for service most of those wftofqouldhave low civilianproductivity. The lAisutility cost is the additional amount over civilian income that would have been.necessary to compensate for aversion to.militaservice and so induce truly'volUntp.ry 4'wbri1istmerit. The amount could be/negative if an indiyidual preferred Military to civilian life, but in thisCase he . is unlikely V be a draftee unless his civilian opportunity cost 4squite high. Thedisutility cost will be less for a Graft-induped.yolunteer than fora'draftee. An example may clarify the nature of the implicit . conscription tax and its. components. Let us take the case. of ,a conscript whose - annual military incomeis $3000, bdt who could have earned $3800%pursuing his normalcivilian . occupation as a school-teadher. The opportunity cost fore,-' gone here is $8.00. ..If it wouldrequire $4500 to induce this . tota. . , .saM'e chap.t& volunteer ,for military service quite freely, r . then the .disutility,cooltis $700, and the total implicit tax a 1 for this draftee is 4800 + $700 =$1500, or 40 perbent of . .. Ihi$ alternative civilian income (50 percent ofhis military income). The draftee pys no foregone rent. ThiS applieS . -4 . to the true vdlunteer; 'If themil' ary, could achieve .all .. its manpower requirements -on a vo ger basis by raising , 1 military income to 'MOO,' thanthe,,foregone rent or implicit , -169- %or tax on the true volunteer is $1000 of 30 percent ofactual militaiy income. # It is evident that this concept of an implicit con- . scription tax is closely related to the welfare loss associated with preferende abrogation discussedwider allocative effects of the draft. Indeed mat we/fare lose is one part of the totalconScription-laicbut-we broaden the concern here toriot only include the difference between reservation prices'under 4 draftVI minimum'feasible. reservation prices, but also the difference between minimum- supply (reservation)picei.and actual Ailitary.income, e 5 as well as foregoneeconomic-rents. The-latter two elements' do nct reflect ny allocative loss theY dorepresent foregone income .under coercion and soshould constitute part of a tax measure. Theposition is readily appreciated by returning to Figure 5.3. ,To the welfai'e lossof area BCD we now add area ABD to give the totaldifference between supply. price and military. income for draftees underrandon conscription. Finally,'eddiftg area A114113 gives eecindmIC rovt foregone:,as .s well.- It will be recognized that ABD AHAB together form what was refgrred,to earlieras,the'grost-taxsublidy - value of conscription--theesavings inbudget outlay for a 'The net tax subsidy volunteer force of the Same size., . would allow for cost savings glue to thegreater"hon-affeetiven . 1 , - p -170- forceComponent wider conscription, an amount that is accounted for separately as part of allocative losses. Since. we know both gross.tax,subsidy value and welfare loss due to preferencrogation for the Australian case in representative year 1970, it is an easy,matter.to the total annual conscription taX'for Australia at: 69 230 = $A 299million/11970,or 10 times the budget.cost of ending the draft in 1970, as estimated' in Chapter. 3. The equivalent estimate for the United States, is * that by Sjaasted and Hansen for the Gates Commission, made on the basis of the assumptions outlinedabove. The -estimate was a -tht.a-1--c-Onscription tax of the order of $3.4billion (1970) t annually for the period prior to Vietnam,adapte d to reflect .._ .-- changes in civilian and military compensation through1969. Of this,ient foregone constituted $1.3 billion..Comparison'' of the supply ftnctkon estimate ofthe remainder of.the tax, ($2.1 billion), with a-direct cross-section 'estimate of the 4 A financial buidenof-consCiription, in terms of foregone alter- . native civilian income, indicated that opportunity,cost was $1 billion-of the tax and disutility cost was therefore, by implication;r$0.7 b lion. These estimates'are undoubtedly 24 the.beet availab1e. Equity In Taxation The fact that conscription imposes a tax, even one of Mich magnitzde, ispot in itself a distributive concern. . 1:41. What makes the tax important for distribution is its incidence. And conscription is a highly discriminatory tax. In Australia over theperiLof Naiiional Service, 1964- 1972,, only 8 'pe;cent,&f maa.eS ofeligible age were required to serve in the military as draftees. That 8 percent paid an average tax rate,including regular income taxation, of 81 percent. Civilians not drafted, and earning the same money income, would havepaid only an 18 percent tax rate. The implicit tax for volunteer servicemenmeant that they paid an average tax on military income of 3 %. Civilians. 25 paid only.24 % on that samd money income. et In the United States over the periodof operation'of Selective Service, 1948-1972, on average,only120.percent. of males in a draft eligible year group wereinducted, and this includeS inductions for Korea andVietnam. _Tor the period immediately prior to Vietnam, theSjaast0=Hansen , (Gates Commission) estimates ofimplicit,t6c indicate a total tax burden,of 51percent Of taxable income for draftees and drams induced voluntees. In 1.067 the average personal tax , paidby'all p ons whose gioss earnings wereequal to the amount that would have been earned_bydraftees and draft- . induced volunteers -ascivilians, was iesi than 10 percent 26 -.of that gross income. - The extent of. discriminationin taxation; between t, and those who do not, will of courseIary those who-serV-t , -172- with the military salary paid, civilian alternative incomes and relative military tastes and the proportion of the population obliged to serve. But it will remain true in general that the conscript and military volunteerwill not 4 only be required to defend their fellow citizens, but also to pay a relatively higher tax than those civilians for that privilege. A small number of-individuals will be obliged to bear a highly dispropoAiohate share of the defense burden, anal .servicemen,' under conscription, will' subsidize the general taxpayer. It might be thought that this, is beside the point if each person has an.equal chance of service. t.auly.3tand 0 Willett have referred to this concept as exantelequity:. where each individual has an equalprobability of incurring the obligation of paying a tax. Such a Situation will rarely obtain in practice. The likelihood'of hostilities, foi instance, will vary over time so alte ing the likelihood of.combat service and producingan associated inter- . generation inequity.' Moreover,,within a generation,there' will be .differences of sacrifice. Even a'random lottery system, for instance, still tends to,producediScximination in the imposition oftaxaiion'for defense. , To see this'latter point consider theAustra0g. P"/ k red to the U.S. National ServiceSystem.. Certainly compared 1 , , Selective ServiceSystem, 'with the latterrs "patchwork quilt" , . 0 ' 1 4 `\. -173- of exemptions and deferments and their arbitrary administra- . .tion by lobal draft boards, the Australian ballot more closely approximated ex ante equity in the distribution of the defense tax burden.- The Australian system was much more StraightforWard and uniformly administered and'involved . _less uncertainty, than the U.S. SelectiveService arrangementb. Nevertheless it was still a long way from ex ante equity. Women, aboriginals, expatriates in an overseas terrory and diplomatic personnel were not even required to regis er.' Religious personnel, conscientious objectors, and married men. and military reserves were exempt or indefinitely deferred. . Restricted --deferment ------was available to students, apprentices and hardship cases, And those notm eeting military standards were rejected: The procees of-equal chance of service was thus consideiably qualified on a non-random basis, and at the same timesthe ex post or after-the-fact situation was still one of:extreme inequity. A very small Minority A4 of young peoplewere .forcea-to serve while others were not, -and those others suffered rib other compensatory burden.- Various.details of the system could well be improved: con'scientious objection arrangements altered, detetments eliminated, and so forth. But as one RichardN. Nixon once. . emphasized: "Some say we should tinker. With the present system, patching upap ineqdity here and-there... . -. But in the long run, t only'way to stop the inequities is o r- -174- it o. to stop using the system'. it does not work faioly--and given. the facts of life, it.just can't. The inequity steg§.fromonesinplefact---that 'some of ouryoung people 4 are forced to spend two yearsof their lives in ournatidn's defen'se, while ,others are not. It's not so much the way they're. selected that's wrong, as it is the fact _of selection."28 Even if problems of rejection and exemption, ofvariance 4r, in the demand for servicemen, and of discrimination on the basis of sex could be overcome, such an "ideal" lottery would only equalize the risk of being drafted. After the fact, all young people would not bear equal shares of the - burden of defense. This concern then is one for the achievement of ex post equity,: Universal conscription t would more closely meet thisvrequirement. But soide exclusion . r - ! ) '.` -- - . . would still be used..-' Onlyliodng men would probably be ,...... ? registered, and Unqualified Oang men would not be inducted. _ IF service was to be4of any' efficientlength, exemptions. would alSo be necessary in manyOccupations... Moreover the induction of all qualified.young men, inexcess.of. military need, is an 'extreme action in the pursuit ofequity. Tlfe I r are al.ternatives. One"i'muld be a compensatory tax on those who.do not serve. In Switzerland all males unableto meet military Acceptance standards, or thoseoabroad, pay until age35 r . 1. . -175- special property and income taxes. Otherwise all Swiss ,males have militaryassignments. .A modified proposal f r "the ,situationlwhere relative military manpowerrequir 2 are smaller, has been advancedby Greene and Newlqn. 0 - -suggestthaij18-yeaet-olds register for military service, and beprested with three options: (1) an enlistmentbonus; A (2) a draf exemption upOn paymenti 43) a lottery draft for. those not selecting the first twooptions. The enlistment ewer bonus would be paid for by the taxsurcharge on the income of those choosing exemption. The willingness to payfor exemption would detgrminekthe size of theenlistment bonus and hence, in turn, Urprobability o' -being drafted for those choosing the third option. The Greene-Newlon proposal meets the concernof many that, while draftees serve,-----, liferemains "business as usual" , : for others. Under this schefie exemptees also pay a 4 and one which is ptogressivein'terms of a surcharge inc r- . , . porated intothe' eT l.arincome tax'structure. The scheme; though, is verysimilar to the system, employed in the U.S. -by the North duringthe' Civil War,..cfselling exemptions to - k 4' the highest,/ bidder Ana permitting the practiceof hiring 'It has generally been held subsegdently'that.:--- - spbsitutes , 4 4 --_____) 4.0' this CivilWar-type schemeis morally repughant--thoUgh as we have seen above,the W.S. Selective Service scheme after World War II, opeatedin a similar manner', insofar as t individuals could avoid service ,,through paym6nt of avoid- ance cost's.- Ironically each of these"exemption payment" systems is More progressive than thelottery' system, in terms of taxburdeh.30 .Both exemption and lotteiy system, though, remain generallyregressiVe, as well asdicriminatory, since . the tax stilf falls to d.:1.arge extent onindividuals whose income isrelatively4loW because of theii. youth. 9. A final possibility that meets souOf these objectives is to extend theGreene-NeWion logid arid consider direct. compensation, of those whb serve. Professor Eli Ginzberg has suggested that "fringe benefits"'should be added'o a or lottery system as compensation,in.order "to makethe in-' cidence Of luck lets.biutal." But why stop at parti4l 4 14 compensation? Why n9compensate those whb serve from general revenue (taxa ionancrdebt) at a rate which ;eaves . .. v. . them as yell off ast f they'ha4 not been drafted,that is , - 6 r--; compensate themfull for beingdraf ted. co4ensation, Bu't no.ceinscrilition-is necessary with-full v.. 0 N.. it being just enoughto induce voluntary enliOment in the military. It is whatthe,indi;fidual requires to join the' military:- And this is exactly whatall-volunteer-recruiment, 44. ' does. It compensatea-individuals enough toenliA,pand it doe's s9 more efficiently thanfullycompensate d' coil- 1 , scription,since it obtains thoseindividuals who are ilost-. nte,and eX post,equity are achieved wil ling to enlist.. Ex 111` 4' V t?, . li pW/ 1 -177- in that everyone has an equal (zero)-cMnce of beingcon - 'scripted and one actually is selected to serve under coercion. In terms of distributive effects, peacetime conscrip- tion does.not invoke the principle of equal sacrifice in defense of the nation.Rather'it imposes a quite unique burden upona distinct minority. That minority pays a fai that is discrimin tory,,regressive, and is paid'in kind through voluntary l bor service. A fully voluntary system supported by explicit money taxes or debt issue,_ would ensure that all who benefit from the provisionof the public good, defense, bear the tax burden of that defense in accordance with the standards of diseributional.equity embodied in .*-tbe.counjtry's geneeal taxation structure. Rather than requiring a few men to mOce,a major sacrifice while earning the tax burden for others, a volunteer System spr4ads that sacrifice without such discrimination and regressiOn, ande servicemen themselves receive an income that is, in..bieIr own evaluation, sufficient tocompensate *for thi. burden of actual service that they bear. tiquity in Condition There another dimension of distributional equity, , . that has been raised in connection with the burden of military service; and this is the criterion of "equity in taxation" as.oppoSed td the principle of "eqUity.in. . , taxation" which we pave been discussing. Equity in condition, . . . , . . ,1 0 < ":178- . or group equity, re quires like treatment of social group- ings. It is Xhislconcept-of distributive equity which implicitly underlies the moral objections to an "exemption- , payment!'. draft systei and many people seem tO feel -that the same objection should apply to a volunteer system since that will lead" resting the.burdenof defense upon the poor who are attracted by volunteer military incomes. Whatever the merits of this argument for an "exemption- payment" or "substitute" draft, for a.volunteer military r this vision of young men being - bribed from the ranks of the Unemployed to serve as the nation's cannon fodder beats 8 little relation to reality. The armed forces are already largely volunteer, the really. disadvantaged simply fair to meet military entrance standards and the officer corps is clearly drawn from advantaged backgrounds. Moredver the higher military salaries of a3 volunteer force open up the forbad range of middle incomes for pOtential enlistment and so mAke the military more attractive to the privileged seg: _ , inmes of society, not less, as is confirmedby British and 32. , Caliad3,an experience.; Much of the concern for promoting group 'equity in N'. military service probably derives from the belief that . military service is.a special case of:high iislt of death in defense Of the nation. But volunteering for w. a profe'Ssional career inpeadetime,,synply.does .not unduly , .. A -179-` increase-his risk since the peacetimeincidencd of death and injury is naturally low, most men areable to serve in A non-combat areas and the risk is mainly inbeing 'assigned to combat leadership inwartime. ;For limited war of the s Vietnam type the death "rate for servicemenis less than the death rate at home, combatcasualties being offset by 33 much lower' motor-vehicle casualties amongactive servicemen. woad be used anyway and For a larger 'war effort adraft . it is those inducted into the infantry fortheduration who then.bear the real burden, not careermilitary personnel. At least for peacetithe and limited warmilitary service, concern for thedisadvantaged would be better directed at remedying the sources of that disadvantagein civilian life. The intent here though isnot'to im e ethical criteria but,rather.to outline thoie equity effectsrevealed by That outline can then'serve as an input, economic analysis. 4 along Oith other information, in theapplication of principles of social justice to thiscase of choice of institutions 34 for military recruitment. 1grit S. J -180- FLEXIBILITY IN RAISING MANPOWER An impoitant argument advanced for a draft even in peace- . time is that conscription may be superior to all-volunteer recruitment in flexibility. One element of this superiority would be that under conscription milieary needs can be met simplyby a change in draft'calls. In Australia and the United States this is a matter, of adminiStrative regulation, since the legislature does not have to approve changes in the size of the draft intake. With volunteer adjustment there maybe considerable lags in responding to changes-in volunteer incentives, and there can be uncertainty as to the exact level of that response. Some evidenceon'the length.of lag is obtainable from'the dynamic equations given in Chapter 4, though the assumption of a uniform lag for all independent variables is restrictive. The empiric4 results are,given in Table 5. It is seen that fors_Australia over 90% of adjustmentis estimated-to take place in the fir t quarter. For Britain and the United States in several in tance$ there is an adjustientigreater than 100% in .the first qiiarter, iMplying a reduction in supply response in subsequent quarters. The'longest lag estimated is for the United States army model with relative pay, where adjustment is largely complete by the third quarter. In general, the adjustment lag with voluntary recruit-,' ment seems not to be too, long.The major difficulty with volunteer 4nrollMent; though, is probably not the adjustment "474. ri -181- lag,but rather the uncertainty as to the exact level of a response. As our estimation in Chapter 4 showed, even.in ahalyzingthe impact of'policy variables over past periOds,.. 0 the variance in estimation can be quite large. The problem ; is, of course, compounded for forecasting. Responses there-'.``- fore cannot be predicted exactly, and in emergency situatipp this could be a severe limitation to dealing with the crisis. TABtE 5. ADJUSTMENT LAGS IN ENLISTMENT SUPPLY AUSTRALIA BRITAIN UNITED STATEa (1-1) 8, S. (1 Relative Pay Model: Army 0.0466 0.9534 -0.1654 1.1654 0.5700 0.43k Defense 0.07.09 0.9291 0.2805 0.7195 -6.1128 1.1128- 'Absolute Pay Model: .Army . 0.0084 0.9916 -0.1735 1.1735 0.3461 0.6539 Defense 0..0751 0.9249 0.2055 0:7945 -0.1097 1.1097 = estimated coefficient of the lagged dependent variable (1:13)- = implied lag coefficient.(the percentage of adjustment in the first quarter). The disadvantages of voluntarism as regardS this uncertainty could by moderated through various devices. One device could be the use of enlistment bonfises fdr recruits in , 0. time of crucial military,manpowershor'tage. Costs would be reduced by this bebauseit would be recognized that the bonus C . would not be 'Permanent, and that it would Apply tc recruits' o -.only. `Provided 'crises requiring bUild-up of new enlistees . . . were rare,asweyL ould aSsume,'no. expectations affecting . - w J potential recruit-flirting ofenlistment would-be Created - - < -;except `at the time needed...A geheral (emergency) pay increase . . would'itcrease_budget cost more than an enlistAtent bonus: Another alternativewould be to improve conditions-of - 4. service sufficiently during Reacetime so that 'an,expess supply - of volunteers,obtains. Quotas cOuld:then be administered on , afirst-C8me'basii,,or.standirds could be raised. X emergency the arbitrary, quotas` would be removed, orstandards el . " , - dowered., This is a case of paying-morethan/themarket- clearing Wage -in ord .to .provide extra advance flexibility. It is, theret-dre, improved,flexibility,,but at extra cost, ich'mdst be attributed to an all force. . There ,is still some remaining uncertainty with these schemes. -Response to_ an enlistment bonus is difficult to- , p , predict, and what is an excess.supply.in peacetime may not be so in war, with a shift'in tastes, 'Of course, themore that -the validity and importance of'an emergency military .- . .. , . . --- commitment is accepted by. the community, the'fewer.difficulties ) will be_ experienced, recruitMent But the pros and cons.on this`issueare perhaps' really beside the point. Jewaccessions, whether volunteer or con- , script, must betraine4organized and' equipped before they I O \ can be used. This is a process requitnva current mini AFL ,. of six months for recruit tra,ping plus; some ape ilie/t/cOr:ps :-.4,'- ..... training.. Further, training is needed.:specialistn imost . 4 , fields for adequate performance.-In-Oe-Oniteld, States, 34w . ?quires that-so lers npt besentoverseasunitthey have at least six months' training. In Ausfriklia-condbripts were not sent to Vietnam until nineto twelvesmonthS,training bad been completed. Clearly, what is required for immeate emergency needs `--AA r is not new untrained accessions,,but tr-#i ed reserves to , sliPPlement the standing force capacity. 'erhaps again .it is s conscription which provides most adequately for this need too, -.1,---- 3. -x-, q - since underconscriptionthe number of elcpp-rienced 'former ,servicemen is greater than for a volunte 0rce ale to higher . ".-4" e turnover. As Prime Minister 6ton of AuSttalia "Sute we have to pay the people who ,trainItgemand4sure' National Servicemen are thmre for only eighteen months, butlit is also true) immediately an emergency dri-Sss, we7have army of twice the size than otherwise we wo haxre ha4."35 One, offset to this is that there is -still turnover -;4: t ---,-t i frOm an all-voluntee.Oorce, and former voliinteerd have an . A undoubted experience and'training edge over former conscripts, thus somewhat compensating for their fewernumbe'rs. More- , over, this core,of ex-regularsoldier6 could be supplemented by an expande(pitizen-force component of non-prior service (.4.. a 4 0 us I -184- reserves. Such reserves would indeed establish a continuing capability of experience and readiness, whereasthe\experr' , / a....%' ience of the forger .conscript, tends to be lost after - a few years. As Dafcy McGuarr,has Pointed out, a conscript trained in 1972 is of little advantage over anew recruit in 1980. . In the .peacetime context the resources expended in the train- ing of consctipts-because of their reserve advantages, would haveti. been better spent.on longer-term training of citizen- / force specialists and leaders, and on such assets as ships, aircraft, dockyards and airfields which have much longer pay- . off. "So far as continental defense ks concerned, conscription is consumption rather than investment and, at a time of low . threat, consuiRtion rather than.investment waste.' 6 (This assumes that conscription-is for the permanent forces. There is the alternative guestion_ofconscriptiOn for the reserve. For the peacetime .,st6tion it can be argued that a . . conscripted reserve is. consistent with a volunteer 'regular force, and indeed. may be preferred to a Volunteer regular force, ald indeed may be pteferred to a volunteer reserve. The argu- . - meht is an application of the criteria discussed'forthesiand- ing force, adapted_for the case of .resetves. Strictly, neither ge system is dominant. From the viewpoint of individual prefer- . ences, individual equity and minimizing economic impactduring, call -ups, a truly volunteer reserve is preferable. ,'The arguments, against such a reserve are budget costs and social . . participation (equity in condition). . a The budget cost consideraftion is probably, not great for part-time service. The prevalence of "moonlighting".in the .:economy,'for instance, indicates the wide interest in secon- dary emplOyment 'opportunities.Moreover\ the real economic Costs will aiready operate irrespective of the.budgetcost. Adequate economic analysis of this is impossible,due to inadequate, data availablb for reserve forces in Australia and the United States during the period of draft-inducedenlist-, ment in the reserves.' The, more important argument is reserve voluntarism will- reproduce the pattern of social parti- cipation in the military that is already found in the volunteer active forces. If there is concern over social representatioh in the permanent forces, universal"or lottery-selective con- 'scription would have much higher economic and budgetary costs, but would ensure ex -post, equity, which lottery conscription does not. Lottery conscription's violationof ex-post equity could be amelioZhted by guaranteeing civilian-comparable hourly wages;' and preference abrogation costs will be smaller for part- time-military Service,than for conscription to the regtaar military.1To the extent there is some i.idity to concern over a volunteer regl4ar*miIitaryleading to profel: sionalift and mercenarism, conscript reserves would serve as a counter-vailing pressure. '. .The Awoice between the two broad alternatives of voluntaiism and conscription for reserve procurement,%fepre- . gents a trade-off .between individualistic and collepAive. 4:41g 4 . -185a- .. _ . values. This, of course, was ipart the Case for kocure- ment for the permanent force. he difference for part -time service, is that a "decision has een made-on active duty . procurement, and that the bala de of net advantages may change for part-time compared to full ]time service. The decisiion,ag ,. % a) f - 7. to active ;duty forces is relevant in that if a%voluntepr .,:,...v.. . . - . system is chosen, it may be felt desirable to. offset the indi- vidualistic values of the former with the collective values of , the ldtter. This would represent a'compromise in the pursuit of social objectives, rather than insistence upon a pre- eminent value. The change in the balance of advantageg is relevant, since a part-time obligation is less of an inter- . ference with personal behavior and was, of life. Whichever procurement system is decided upon for reserve forces, the point is that it is reserves who are',most relevant fOr emergency needs. The question of induction flexibility really only arises in consideration of meeting manpower requirements for continuing hostilities and large scale mobilization. Here the advantages of conscription for regular active duty become more apparent. For actual hostilities, volunteer recruitment is uncertain, inefficient and inequitable. There is no ability to rely upon the correct number of volunteers forthcoming at the time required, there is a need to, decide administratively which civilians serve a defense effort better in their normal occupations, ands. we may be concerned that no social groulI bears a disproportionate ir:"4-P4-4ge . ...185b burden in actual time of, war. The burden of actually serving and in supporting the war effort through higher taxes will b more widely'distribu.ted under mobil4zation. For the possibility df more than"brahfire"war (which' can be met by the standing forces and.reser'ves) itis,i.eason- able to maintain a stand-by draft will full registration and classification procedUxesestablished. 6 , 4. , 0 rt -186- r ISgUiS OF. CIAL CO TROL ,, . , , , .0. -Wei have discUs ed, in det0.1 the evaluation of alter- native military manpower procurement with criteria to whicha economic analysis was able tomake. certain contributions. . . - But there are Other important' criteria about which economics can say little, and yet which may,carry just as much weight as the factorsalready considered. . For completeness it is useful,to briefly review the major remaining issues that are raised in considering the adoptiOn of alternative procurement systems for a peace- . time'Standing force. 'It'will be seen .that some parts of our 'earlier analysis do carry -over and...contribute to /under- , standing of these further isdiles, but-not as comprehensively a as before. Individual Liberty Where the criterion'is individizal liberty it is,clear that isconscription ,thatserves us badly. Conscription' is a most drastic interference with' the ability of an In , . . i dividua,1 to order, hiS life as he sees tit: Of course if' restriction of individual liberty i'S required to strengthen or preserve the overall system of .libertythe community's claim takes- precedence and indi- , vidua1 liberty must .give wax. The goverftment does have, a. - right to maintain public, order and security. This is an "enabling right" whit the stateymust possess in a demOcracy 4 . s4 -187- if it is to fulfill its function of impartially )6pporting the conditions under which everyone can be free. Individuals . can be seen as having a natural duty, subject to conscience, to support and comply with demands deriving from serious challenges to national security. The essential point, however, is that'these rights accorded the state in the name of national security are not given carte } blanche. They:can.only be legitimately invoked . 4 when the security of the people-is genuinely felt to be . . threatened andwhen it is therefore likely that not limiting liberty will .lead to an .eVen,grea ter injustice, the complete A \\ loss of liberty. Since our study is'specificiallY concerned with the recruitment of,a professiOnal peacetime military, it 'follows that if'considerable weight is accorded the importance of individual liSertY,,there will be a strong pr esumption, on . . . this ground in favor o voluntarismo, and againdt conscription. Where substantiVe potential; threat to the nation's security: . -is defined, tpe weight acCor&ed.individual liberty may well : . _, be reduced if its abrogation'is shown on other grounds e.g-.. l !,1 I ,, ' i,-C , ,. flexibility) to be ess64tial to zthe preservation of the general - - , , ' liberty. but this situation of clear and present danger to - .... , % ,the nation is'not the strategic situation posited for our analysis, and, as the diScussion of flexibility indicated, a draft pystem'i$ npt the.olltly cans of effective preparation in peacetime for.he uncertainties of the future. ; $ 't ( -188- ? A.Mercenary or Isolated Army? In comparing the performance of both conscription and voluntarism, the all-volunteer force is'seen by some as inherently a mercenary military and therefore anign9ble and unreliable one. The problem is. said to be the placing of a monetaryvalUe on service to country andon.the lives of its citizens, and the raising of a force only byfinancial incentive. The first of these concerns can be readily dealt with. Soldiers will have to be paid and .afiricial value' will thereby have to be attached to their service. This cannot be avoided any more than we .canavoid a doctor charging a fee for savinga life. We are gratefulto the doctor and we rewardhim well,. To try and say that we should not reward a soldier, and that he should insteadreceive only a low-wage A sip as not to demean himself is intolerablenonsense.The soldier no less than anyOne else deserves to be paid a fair and adequate wage, ip times when every citizen is notsacri- ficing all for a war:effot. I More complex is the concern expresed thatin a volunteer force Men Will be motivated 4ot brthe concept ofservice,: but by -the 'lure of greater.gain: -This is felt in itself. - ./ distasteful, and is .also believed inimical to reliableservice. .. 4 . CS0) That the volunteer'soldiei so motivated-willnot give all in , . . , ,e" 4 . , hisrcountry's defence is the apparent conclusion and one , which leads Peopiie, such as General Hershey tofeel that . 0 ' O 2.1.{ 0:' .; ( r.. 2:1:1 -189- 'personally I don't want to be defended by individuals who. are theie for no other reason than the money'37 Such a view is a gross-, albeit unintended, insult to all those who have volunteered and will volunteer for mil- . itary service. Are the volunteers .presently serving in the fOrees Unreliable money-hungry mercenaries?Will the im- provements,in pay and conditions of service associated with an all volunteer army suddenly convert that force into an un- 'principled band of mercenaries? The term 'mercenary' is a highly emotive one. 'Milton Friedman haspointedout.that to proponents of free enlistment it is a volunteer army, to regular soldiers it is a professional army, to potential recruits it is a career army mid to opponents of the idea it .is a mercenary army. 38 'Mercenary' carries strong implications of disloyalty, and literally means willingness to work for money as one's only major motivation, There may well be some men who place great weight, on the money offered in the services. But even' for.these men that will not be their sole motivation, and for most a complex variety of factors will apply. It this, volunteers.for military service will be no different from men entering any othet occupation.As our model of occu- pational choice indicated there will be a wide range of factors entering the choice decision and while income will be one; it is by rkmeans the only factor, and the weight. accorded it, will vary across individuals. it ' t. A -190- Besides, the bails Of a volunteer approach' is that servicemen be paid under the sameprinciple as every9.else in society, i.e. they should be paid their hire. To pay less than the amount at which sufficient' numbers would serveis actually to tax attachment to serviceanpatrilotism. There is no reason to assume that a man's senseof duty will be'weakened or his morale underminedby having his services appreciated with an''appropriatewage; tosuggest that men will enlist "only for pay"is to imply that all other factors influencing ,a decision to serve inthe military sudden- ly vanish with a pay rise.. Since our discussion' refers to the peacetime' career military'it is appropriate to draw an analogy.withother oc- cupations. There are numerousoccupations'in addition to soldiering which are in thenational interest but for these too market wages are paid, For 'instance, it is- for the " 1/4 community's protection that there is a courtsystemand that judges areappointed-.' 'etWe do notconscliptlawyers to become judges sO that thosejudges will not be mercenary. On the contrary wePay market wages, and the adMinistration of justice is noworse f4 that. A. secondobjection to the, volunteer force in 'terms of , - . preserving the well-ordered societyis the belief that a from civillan.influqnce, ' professional army would be isolated with the possiblereialtof,a divergeFeof itspurpose.frOm that of the civilian government.,This could lead 'to.undue 0 "; pressure on the civilian government, and even, ,ultiMate4r, 'direct military intervention in political life.-In a sense this is a sophisticated version of the mercenary argument, 1 though here the emphasis is on 'professionalism' and the dev- elopment of a rigid military ethos in isolation from civilian influence. . , . c, J ,But one should not place great weight on the role of the . - recruiting method in preventing military interventions since theie are good 'a priori reasons why it should do little to influence the attitudes of the military establishment. It is th'e officer corps which defines military attitudes anddeter-I- mines military actions. And the officer corps will necessarily remain a vdlunteer one' irrespective of.whether or not there are conscripts in the force,Conscripts come in only at the lowest levels of military ranking, and since the ,task of Army training is to militarise civilians and since the stress, A of that training is on discipline, obedience, and subordination, there is little opportunity for young impressionable conscript youths to civilianise the military. 'The presence or absence of conscripts will play lfttle r , part in altering the political loyalties'and degree of influence 4i of the militdry. If the attitude'of the military is, n fact, consered a serious problem, ottier pd icy Changes 81.16h as . . 4 ; !,11iL greater lateral entry to the forpw4re ploy 1 of ,fixed terms t. . of engagement, and the greater uselofic4v41.1pan inst4utions ! ' for'education and training ofmiliarypersonnel, would'do -192= Much more. A generalmodel, of'what'might be ac ved,is* 'provided by, the West Getirian rmed forces. .Americah feai-s -, _ . c Ca revivalAkf-German militarism ;Vto the establishmente *. . -, of a military consitution which is More Conducive t '' . Control-than almost any.other the- world. But ulti Y, 411 . it is the broad governmental and cultural features of,a society . . which are the'real determining fabtdrs." This is. &conclusion well7supporea bythe available historical. experience. -,In°the countries we oar xamining , . E, in this study there have been no realmilitary challenges to . civilian lladershi/5 in modern times: ,The- rief confratations 4 , . ... N.of'General MacArthur with President Truman in the United , . . ,,, ., . States and General Blamey with Prime Minister Chifley in Australia Were quickly resolved in favor ofstrong civilian 4: leadership, and in both cases it may be noted that'the , generals-were commanding. mixed (with-draft.) forces. T ' This latter point thbaihoshould nbtloe taken to imply that oxiscrit forces are actually, more amenablelto support, into military, challenges to leadership. European and Latin . - American experience with military intervention.iri,politics .1 . , 4 , ..,., . . . doeS not dhow any discernible relation with the procurement:t . . , , -q1 Systet. Wilson andoraCkhave documented forLitin America-. ,. ( 'the' point thatOver.the 'perid4.:1945 to 1968 while there were , . 39. successful military coups cii.r revolts in the :11 conscripting. 4 . , states, 4'..tkirlj, of these were accoUntedifor by two 'countries , . , Ptir*F-1, on p,lind.that,Pie 7,sttes relying uponvol-Ontar Service, ?' "- also exper, uccessftl military coups ior;r- evolts;19t , Factors ofer:^than the procur,ement system would ieem'more rt t indetetm4ngtheviability of civilian goVern-, . Foreign Policy Control The fact that an all-volunteer force is ;unlikely, alte in Any significant sway the ethos ofthe'Military alio ( , has implications1 for the belief expressed that suc force .. . -t : 1411 foster*mil,i.tary adventurism. Some imagine that .military ,- their training and professidnare deSirous ' J . men by virtue` of ,.. . t ,..' ,. of testing their expertise 'and of seeking military Solutions, , . , , i ,,, , tq p blems. Eyen ifitrue, we have indicated' hat this' , . - attitude willnot bealtered by inclusion ofconscripts in I 'the ;yanks.'It will be as.prevalent amongst those who lead. I._ . , .. mixed-force .as.aibngst those Whowou cis,leadana14-volunteer, rr . ' ford ;:,-- these leaders being one and the same. , - tt But perhaps,adventurism is not theprodlict of military 1 . i . / ," -'t : , . attitudes but rather of less tablic concern about the use cif --- thejimedforces. It may&thought,for instance, that"' , public discussionisluchmore likely to be ilex era if the ( of- draft is used to fi41 t a war than ifvblunteer.troops are used. The impliCation is that the size anddepth of public interest . dn ereign policy is inCreased'`wiiere thedraft(is involved. cfSncleSiorrwell-supported by our earlier analsis of the fiscal E;olltiCs ofconscriptiolt,whch indicgted 4 e I -194- .-; that interdependent 'utility Motives rather than belf-interested pecuniary motives, may carry considerable weight inthe. . Political choice of military manpower procurement'systems. The political participation (voting, lobbying, demonstrating, etc.) .of concerned relatives and friend's of draftee0 may well A. be a° more efficient check on military adventurism than the . equivalent activities of the beleagured taxpayer faced with .1 tYte prospect of an increase in.an all- volunteer force size. 'ThereWilli, of course, be some-'who would wish the public's role in formulation of defense policy to be dim- inished anyway; and hence support the all - volunteer force, on . - the grounds that it inhibits. the freedom of actioncik the 1.# military less than a draft. In-national:security matters the., 4 view is i deed quite common,that the 'state knows better than( its citizens what is best for the national well-being. . . . . . ut this ,is a dangerous argument with crucial limit-- , - * ations, for state power has been known to be predatory and, eve4"/- if well-motivated, fallible. It should be obvious,, after,all, that in a war one side at ,least must be encouraging, evil. Therefmay-be a presumption that our.own nations ore not . , aggressors, but-in matters ofthin moment we must bt sure there are no mistakes. Appeals to the "weight of the auth- , r ority and knowledge of the'CommonweVah'Government"; as ,-the Anglican Synoarin Australia once termed itapprovingly, must be treated with caution and.nsed sparingly. r K. . , mces it follow that acJraft 1.6 to be advocated to help , .limit foreign and defehN 'oliCy excesses?One suspects that 1 -=there_are othet" alternatives which Can be built into the 4 'system of political checks and balances and which would, be -a better control than conscription: Senator George McGovern . , .. . . has characterised the difficulties in relying upon corscript- ion as our check as"follows:. "We tell the young draftee, ".You go fight, take injuries and be,-:killed in a' mistaken war. Then Perhapkyour.parents and frl_ends will start objecting and others like you who have, not. yet_ been called will start protesting, and then create a politicalclimate , 40 in which we can act Safely,::"" 4early. we should beek more - . 'effective and worthy means of democratic control of govern- . . ,.. . ment foreign policy, .0; ,,,,,..1 . 44 , We .should, also recognise that using conscription in , . . this way as a check, on government can produce what may be . _ one of the most dathagingrearO.'Sts of all o'f conscription -. . r : if me resort to a draft ili times other than major.need,..when the nation is threatened..Apeacetime draft may well actually .- , . ., t -- . erode patriotism and produCe,produce, alienation of those who are sub - , And this,is an, observation".that is more than a ject'to it'. , a valueju4ement since it is borne out by the experience of . the U.S. and Australia prior to anyconscript involvement' . . in the Vietnam Wa,r. tbth couftries were.experiencing considerable agitation by youth, dverthe draft. In peacetime, . . . . P A. q' 2nR I qo '496: it was difficdlt for many, of the young to ,accept the COM- A " . pulsion ofa,draft as valid. . ''. Of course many yoUng men lully-accepted0 the obligations , imposed upon'them. But others reacted by oppt sitioA, bitter.. ness and resentment and by withdi'awal and a enation from social commitment. There'may have been 'ot ejr, factors pro-. %. ducing. or contributing to this. but the draft was the most frequently expressed focus for the discontent of the time. Irrespective of whether those who were unhappy with apeacetirde_draft'were justified or not, "the fact remains that th discontent, produces significant erosion of social harmony. When a generation, of hostility is produced, and the law is ridiculed and the whole political process is called into question by significant proportion of the nation's young men/ it certainly bears asking whether this'is' a cost. worth paying for the other presumed.advantages of peacetime conscription. Of couree,some may see this as actually a benefit, but this is not Picely to be a widely-shared view. t° Moreover it may be that the use of voluntarismin peacetime for the standing military, supported by reserves 4, and a backup drAf,t, may well be a more effective "package's for prbducing maximum responsibility in the use-of military manpower. For then the need to. call-up reserves and to Commence draft calls,, rather than to posess the:latter as -- ,... . an ongoing.i institution,will ensure the maximum public . A.A. . . . attention is paid to theonation's militaxy involvements " .!. at the beginning of inx 'significant commitment. , n , CHAPTER 6. SUMMARY AND CONCLUSION "Is this the age of volunteers anywhere else in the world? Docother countries rely on Niolunteers and a territorialarmy? In America? No. In Britain? No."' Sir Wilfred Kent-Hughes Commonwealth Parliamentary Debates, 1959 \ The military manpower requirements of the United States and Australia have changed in recent years. The needs imposed by involvement 1.in actual hostilities have given way to a strategic requirment fora peacetiffle standing 'military.. The geographical isolation ofthe two Vtouptrieslw meant, . thato-4,k------_ ipo this standing military be,oriented rat maintaining a:basic , '`military capability an& framework for expansion, rather-than territorial defense: Correspondingly; there is.a need to assess the form of military manpower procurement appropriate to these changed circumstances. During the Vietnam hostilities, both Australia and' the United StateSused a draft to supplement voluntaryrecruitment to the regular',forceS. In the Post-Vietnam era, the_broad. alternatives are to continue witl3 some form of conscription (universal, selective, or lottery) or adopt all-volunteer 'Procurement. 2'1 CI -198-- There is a literature in economics which sees' the. o° adoption pfall-volunteer forges as unlikely, even in peace - time, due to the'pecuniary advantages accruing to the tax- .paying majority in a democracy with a,draft. ,Investigation, , thisthis proposition,,including empirical analysis of an K, Australianfr, referendum on conscription, indicated that voting on the craft issue is not readily predictable on the basis of fiscal interest alone, and that more attention to the inter-dependent utility aspects is required to understand voting on the question. A draft is not a foregone conclusipP . in a democratic state. k If a "volunteer military may possibly be accepted for , *2 peacetime militarymahpower piocureMant, we must ask what 1 are the conditions which will enstire sufficient supplyTto.meet specified military manning-demands. To answer this, we examined how the procurement alternatives thems4lves affect the level of accessions needed to provide agivAmilitary capability; and it was fouSd that a volunteer for e would require considerably fewer accessions than a draft system, . dud to less labor turnover and fewer training and spport personnel. This reduction in accessions requiremehtg could' be achieved without. any necessary reduction in quality of personnel and indeed might well represent an important gain in , : A motitraticm and experieucd.. Since there.is no question that an appropriately struc- tured draft can obtain the accessions required of it, at least_ 211 -199- ;. o in the absence of widespread non-complicance with drafttlaw, the task tfien becomes a study'of the conditions under.whichy. the required voluntary accessions will be forthcoming.To do this, a model of military-civilian occupational choice was specified,and appropriate estimating forms for the supply of volunteer enlistees as a proportion of population 4 Caere derived. "'Regression estimates of the parameters of the estimating forms were, then obtained, and for Britain and _ . Canada as well as the United States and Australia, since the former two countries offered valuable additional eviddnCe on the long-term operation of an all-volunteer-system. The derived equations proved useful.eStimUtors and pro - vided a basis for analyzing voluntary,recruitment in the four countries. The effects on enlistment supplies-of variations in military and civilian pay, unemployment, draft pressure, quality levels and taste changes were given particular atten- :. tion. Pay levels:had the expected influence upon,enlistlnents, though for Australia and the United States there were some estimation difficulties due to corlinearity and insufficient variation in the data series. Resort to additional evidence however, permitted satisfactory interpretation. The effect of unemployment varied with the country studied,reflecting differing labor market structures, and the effect of draft presspre in inducing enlistments varied with the level of . draft calls and With *the form of the draft. Changes in 212 -260- s. P%11 ., quality levels demanded and offered were highly significant determinants of variations in .dhlistment rates'ih,all the A - countriesstudied, and taste chavgeg_over.the Vietnam period also proved an important influence for U.S. ehlistierlts. Using the supply equtiong,illustrative.calculatiahS.of bgdget cost of manpower procurement under all - volunteer., and with-draft alterna6.yeS were presented. The question that remained-was, given that the_ budget cost bf-a volunteer force usually exceeds that of a orce'Using the draft (not Withstanding the lower accessions requirements), should a volunteer system be adopted?Emphasising the peace- . . time context,various criteria under which this problem could, N be examined were enunciated. It was found that a peacetime draft for a professional standing military would impose signi- ficant real economic costs that, would not obtain under a volunteer force (particularly pre erehce abrogation, uncertainty 3 , and avoidancecysts), and thatavolunteer force would better iserve the distributional criterion of equity in taxation. . 1 . C - . : f ,(individual equity), without significant violation of the criterion of equity in condition (group equity). Commonly suggested difficulties with a volunteer force in the area of expansiofi flexibility and in pioblems of , . . . .1 praetorianism were found to be not really affected by th. . . . procurement systemgdopted for the regular forbeS and were better dealt withbA'"alternativempchanisAst This meant particularly the establishment of a ready- reserve system,' A .s.4 -201- possibly by lottery draft, and the maintenance of stand-by - Orate arrangements for meeting emergencies and fqr prolonged or major hostilities. .A- draft for reserves would be o especially appropriate 'if it isdesired to 9ffset the indi- , -- vidualist values of a volunteeractive duty force with 'the-. -collectivist values of a draft. A stand-by draft for. major expansion is readily justified by its administrative, budgetary and equity advantages in the situation-of large- . 4 scale confiict. For peacetime however, the balance,of advantage would seem toglid with all-volunteer recruitment . 4 for'the active-duty forces, partiCularly for the strategic circumstanc6 of.no territorial threat to'the nation.. is el .214 44. . . I / . 44 % 4. l ,4 ( .0 1 1 . DATA APPENDICES / IP . 400 AV .., / G 4 I r DATA APPENDIX: CHAPTER 2 _The Australian:Conscription Referendum of 1917: Cross- Section Regression Analysis Data: VOT. AGE FEMALE RELIG BIRTH RURAL AF0S. NSWA- M ,0.3003 0.5691 0.5297 0.2226 0.207N.....0.0437 0.0442 . , 1. -NM 0.3370 0.4909 0:4621 0.2378 6.1293 0.5184 0.0407 , VIC - M,0.4615\0.4659 0.5548, 04054 0,1781 0.0480 0.0462 -NM-. 0.5050 0.5656 0.4917. 0.2168 0.1326 0.5386:0.0495 QUO --M. 0.4491 0.5249 0.5263 0.2208 0:29'03,0.0701 0.0541;7 -NM'0.4114 0.5109 0.4451 0.2373 0.2460 0.5313 0.05071-5' SA, M .0.44.76 0.5123 0.5446 0.1331 0.1652 0.0861 0.0502 .r -NM 0.4078 0,5183 0.4707 0:1270 0.1143 '0,5424 0.0398 WA- M 0:6572 0.4750 0.5286, 0%1856 0.2497 0.0807 0.0776 0., . -NM 0.6Q64 0.7728 0.3947 0.2203 0.2588 0.6230 0.0812 TAS - M 0-.5038' 0.5038 0%5602 0.1542 0.1117 0.1094 0.0442 -NM 0.4892 ,0.5572 '.0.4858 0.1548 0.0792 '0.5889 0.0418 M = Metropolitan. NM = Non-Metropolitan For sources and notatio.see p. 34. ' ti / -A2- : '2 DATA -APPENDIX: 'CI-WITTER 3 . ; Re-enlistment Analysis: Australia; quarterly,1966 (3), to 1972(2) Data: ,. Quarter. NRERA WR i,1R s.a . , 1966(3) 10.7 .819 .388 : .799 . .355 ,. (4) 9.0 .814 :400 .780 . :265 1967(1) 17.7 819. .398' .8.12 ,.456 2 (2) . 15..3 -.809' .411 .836 .425 3 18.2 .812 .428 .786 .455 4 (4) ' 13.4 .803 .398 -:790' .335 5 1968(1)' 23.1 .803, :410 .799 .575 6 (2) 14.5 .803 .411 .745. .377 7 *(3), 15.9 .793 .390 .8251 .444 8 . (4) 12.8 .783 .393 1, 807 4,65 9- :1969(1) .22.3 .770, :374 ..7.84 4513 , To; .(2) .19,.5 .783. .053' '.723 . .501 11% (3) 16.6 7. , :168' .328 .7,4,0 .456 1.2 (4) , 12.3 -.770 .345 . .745' :325 i3- 1970(2) 17.6 '' '.753 .314 4 766 .526 14 (2) 1 6.7 .737 :308 .666 .445 *15 (3) '21.4 .729 .374 .696 .534 16 (4) 14.4 .730 .379 .729 .356 '17 . ' 1971(1) 27.9 .720 .402 ,.666 .646 18 (2) 17.5 .754 :441 a650 .467 19 (3) 15.9 .825., .523 -.699- .517 20 (4) 11.3 .815' .582 ° .710 .381 21 1972(1) ' 16.3 .793 .661 :741 .610 22 (2) 13.5 .778 .704 .687 .458 23 MEAN 16.4 ,.783 , .421 .749 .451 .11.5 Notation: / ( NRERA = non-re-enlistmentg- army, vale enlistees, as proportion of ' total enlisted strength. ,' WR = pay ratio: (Corporal with Grade-1 military skill / Average.;' weekly earnings per employed male unit, civilian). UR -=-average male unemployment rate,, seasonally adjusted. S = proportion of six-year men in thosecoming due. t N = proportion of:enlisted strength' coming due. for re-enlistment. T =., time dummy variable, Source:, UriOublished datayroided by the Directorate of, Manning . Army Headquarters, Canberra, October 1972. .. C' 7A3- DATA APPENDIX: CHAPTER I- Supply Analysis L Symbols for Variables . A EnliStmenii Applications AD . Rectuitmen!advertising expenditure. CPI Consumer Price Index Casualties - E nlistinents ET Enlistment te*rm'o engagement Inductions , NaturaloLogarithm LF Labor Force S. -PO Public opinion QA 110iity.acceptan-Ce -RE Re-enlistment RP Rebruiting personnel S Seasonal 'TP Total- population Unemployment V' Vietnam WC Civilian wage WM Military wage WR Relative wages ,Notes: 1. The addition of 'A', 'W., 'R' .orDV' to the, above symbols indicates 'Army', 'Total Defence', 'Rate' or 1.1Rumcny Variable' respectively.- 2. The additiOn*-of numbers to the above symbols indicates alternative definitions of the variables. , 3. The preface.symbql "LG' indicates that the variablelis lagged. S. 21S " 4 fi . Data Sources and Notes: q ' AU TRALIA,'quarterly 1966(3) - 1973(4). 1. EAQARA, , . - Unpub ished data, Directorate of ,Manning, Army:Head- .quarters, Canberra,(May 1,972'& October 1974, ments also.excluded-a0prenticepnlistments, ,t f 2.. EDMARD, RPA:. Unpublished data, Directoi4%:General-of Recruiting, ' . 7 Department of Defence,seanberrat(AugUst & October 1974 Army Recruiting Personnel figures are establishment',as distinct from actual posted strength. staff and recruiting assistance thrOugh:the.Commonwealth Emialoyment'ServiCe and Honorary-Recruiting Secretaries in country are is not incsivaeob-i:,,- ' 3, TPI, TP2, LF1', ,./ :i . .> . .t, . TPI referred to total popuition malei'ages 15-19'fast.; birthday and TP2 referred to total populatibn males aged, 20 last birthday. The Source for both series was Common- wealth Bureau of .Censusand Statistics. _Demography" annual bulletin, for figures to 1972,and Commonwealth'' Bureau of Census and'Statisticso Projections of the ° 4 Vopulation of.Australia, 1968-2001, including Immigra-. .., 'tion, 'mimeographed, December 1972, tor.post 1972. eet- imates. The-data provided'were annual as of JUne. Linear. interpolation provided quarterly estimates. . LF was the,civilian labor force of 15-19,year old .. males, as given by ,Commonwealth,Bureau of ,Census and ',Statistics, The Labor Force, cterly bulletin.- 4. WC,. CPI: 1 4.7 WC was estimated using .average weekly earnings per employed mal.e.,unit.and CPI,was the .consumer price .nindex, all groups: 24M1 source for both Series was . CbmMonwealth Bureau of Census and Statistics, Quarterly Summary'ofAuStralihn Statistics, quarterly An adlUstment was 'made to, tkie offiel civilian waive series. to compensate for the remov of trainee teachers.from the series, as from 1971(3). A.deduo- ei-Ition of 30 cents 0.971)' was made, from the official series for each quarter, 1971 (3) to 1973 (3). ,0 *4 A ,, 1I The unemployment figures were:males-Aander 21,re4istered as unemployed, and .awaiting placement. The _Source Vas eDepartment a*°Labour, Monthly Review of the Employment .- Situation. ' -.. .., .-4 . - 1. . . i , . . . ,. , , . i The public' opihidn vari4le was estimated-as the.,prppor- -) tion.of the sample surveyed who responded _affirmatively to Galldp pall questions On "shoill.,d we kee4-_-.dur troops 1.0 Vietnam?", as given, in Rdy Morgah Reierch Centre, 'Australian. Gallup Polls, quarterly. Sa0r3le size is -..220 I. .--1 Linear interpolation. was emploted to provide 'estimates,. ,..' ,..,,,, ,for,quarters when thisquestidn was not asked, This T,-4' ''-1; a-severe aSthumption for'the period 1971(3) - -19:72(3),, 1. For the' period from- 1971 (1)- 1973 (4) cohstancy of tas es , . Vas assumed in the absence,..-of a. further-obserVation,., . . -,CiNADA annual, by region.; 190-1973. ).. ED, 4ORD, WM:, ,. . - , Ali military data were unpublished statistics- provided, by the Personnel Applied Research Unit, 'Nation41 Defence -, HeadTierterS, Ottawa, (October 19q4). Although requested, vio '::' 'qUgrtdrly national data were not provided. Instead the '/ only data made-available Vere annual, for follbwihg / ... r,regions: Maritime, Quebec, Central (Ontario), and . estern. Regional dummy variables diatiloy they symbols 2SM, 'SQ, SC. Mestern Canada was the base region.. The enlistment data refer to male unskilled recruits only. . * ;- N -,! ...2. WCs The civilian earnings series wasbased on average weekly wages and. salaries, ,industrial composite ,.- fo't each, region.- - The Western region figure was :derived as . a weighted average of component province series, using 7 s'" province labor force as the weight,. The source was'. Statistics Canada,- Employment, Earnings and 4-tburs; '49 ,.patalogue No: 72-002, monthly. , . . 3. U: . labor force and unerriployment,,males, by region ere the series used for estimation:- No age breakdown. as. available. at the regiohal level. The series were published i1n Statistics -Canada, Historical Labour Force Catalogue No. 72 ;201.4. annual . . Statistics ! (1973), -A6-. 4.CPI: Consumer pricMiindex; OA items, by major city for .each region: Statisticsp . GREAT BRITAIN,quarterly, 196.d-0)7197'3( 3 ). 0 1., EA; ED, WML, ADA', QARA, ElIDV: . ' . ..,,, . - - , All,militarydatawere unpublished statistics'pkovided by Defence Statistics Branch, Ministry of Defence, London, (September 1974). Enlistment figves-are. for the ,United Kirigdom and include-apprentices and young soldier entrants, as well..as adult.mcruits. The army advertising figure 'is direct expenditure. on All Media. The enlistment' term dUmmy Variable reflects-the introduction of anew shorter .''three -year service engagement option, froM 1972(3), for . Army enlistment. 2. LEI, LF2, U2: LF1 is the "number of Male civilian employees, 15-19 . years old. The estimate includes Northern Ireland.An adjustment'was made to this labor force data from 1973(4) to AslloW for-the,estiMated 141,000 15 yeat old males who dienot leave school Owing to the increase in theschool7 . leavingage in September 1933. (Department of Employ- °petit, Gazette,I April 1974 p. 309). I LF2 is the number of male employees,Great Britain. This was'the base for the unemployment,figures, which referred to total rake unemployed, Gieat Britain. _Age speCific estimates are not available on a quarterly basis sot that quarterly data for 'all males was used for determining unemploy- ment rate. Short" term fluctuations are less important for'LE1,-however,, SO that the quarterly-fseries there I 'was derived from annual.age-specific figures (at June)' by linear interpolation. It is apparent"that British -statistics in this area, are somewhat deficient." EvA., for the annual aget'tpecific employment and unemployMent data there is,a two year lag in their provision even yin unpublished form. Our source was pepartment of Employ- ment,,British Labor Statistics Yearbook, 1971, Table 931, andiunpublished data provided by the Department of Employment, London, (October 1974). 3.- MC; CPI: The civilian wage series was the monthly index.of average earnings, in Central Statistical Office, , . +' 4 2.1. , Ist f.- 1 , r Annual'Abstract., 1973, Table 163, and updated from 'Department of EmployMent,'Galette, monthly. CPI was the general #idex,ofrEarT7gtices, all.items, given in Central)S,tistical Office, EconomicTrends, December 1973. . A UNITED STATES, quarterly, 1966(3)': - 1974(1). 1. EA, ED., .WM, kPA, QARA, QARD, IA, ID: Enlistments and,indudtions data, army and defense, mere froril'Armed Forces ExaMininqrand Entrance Station Nan- tatiVe Distribution Report of Male Enlistments, Induc- tions and 'Rejections, Headquarters, U.S.-Army Recruiting Command. The quality acdeptance data were also from . this scKirce, though note the diffetent definition of quality'acceptance.used here Compared to the other countries., The estihate here is 'proportion of- Mental Group IV enlistments in total enlistments,(Mental Groups I-IV1 Army'repruiting personnel numbers were provideU :by Headquarters, U.S. ArmyrRecruiting *Command/ Fort, Sheridan, Illinois (October 1974). The military wage figure was total monthly regular military compensation for a recruit, ana was provided by the OffiCe of.the . Assistant-Secretary of Defense, Manpower and. Reserve Affairs, WathingtOn (August, 19741.', 2. :7?P1,f,TP3, LF, U, WC: TP1, LF and U referred to the,total population, civil ,an labor. force and numberuneMployed resoectively, for males aged'16-19 yeard. Rhe sources-were U.S. Department of , Commerce.,, Bureau oeCensus, Current Population Reports, -Series' P-20, for.the total population figure, and U.S. Department of Labor, Bureau of Labor Statistics, Employment and Earnings, for the latter, two CiVilian earnings also came from Employment and Earnings, and referred togrossaverager-weekly earnings of pro- duction;ot non-supervisory workers on'priliate 'non- agricultural.pdyrolls.' TP3 was used as the. base for induction rate calsulationssand was estimated'as the ' total population of 18-24 year aid males, as;givehrin durrent Population Reports Series P -20. Estimates of TP1 and TP3 beyond.5.971 were unptiblished estimates obtained from tbe Bureau of Census, Population. Division, National Population Estimates 1.14, Projections Branch, Washington (September 1974).' Quarterly total population 'estimates were formed by linear interpolation from the official annual (July) 'estimates`. 1' .3. CPI, PQ: The consumer pride'index was from Department of Commerce, Office of Business Economics, Survey.of Cu'rr'ent Business. The public opinion estimate was the.proportion of those Sampled (n.= 1500) who responded ,negatively to the ques- tion, "bo you think the U.S. made a mistake sending' troops to fight in Vietnam?" The source was George H. Gallup, The Gallup Public'Opihion, 1935-1971, N9w York:. Randot. House, 1972, Volume 3: 1959-1971. Post- 1971 data came from-unpublished .tabulations based on computer stored records ofGallup the Roper '.Public Opinion Research Center, Williams College, Williamstown, Massachusetts, (September. 1974). Linear interpolation provided quarterly. data from 1971(4) to 1972(4), and n9 change in tastes was assumed after 1973(1) when the question was asked-by Gallup polls for the,last time. AUSTRALIA, quarterly by state, 1966(3)- 973(3). 1. EA, WM, IA, QARA: All military, data were defined as for the,national quarterly data and came from the same source: Dir torate of Manning, Army Headquarters, Canberza, (S4ptemb r 1972 and November 1974)'. The data were pro4ided- Military Command basis which ,correspondS'closely Australiafi state-boundaries. " 2. TP1, TP2, U: tot The populatiOn base for calculating the 'enlistment rate was TP1, the total, population of males aged 17-24 years ]last birthday, by state. The populatiori base for-the induction rate was TP2, 'the total popUlation of 20 year old males in each state;The source for both,series , was unpublished data on population projection"§-provided by the Bureau of Census and Statistic,.Canberrar (July 1972). The figures were as of Jude each year, and quarterly Ofttayas estimated by linear interpolatiOh. The unemployMent series was junior males (under 21) registered unemployed and awaiting placement; as given by the Department,pf Labour;',Monthly Refiiew of the Emplcniment Situat!on. The population base for-dermin- ing the unemployment rate was TP1. 1 - 3. WC, CPI: The civilian wagewwas average weq41.17earnings per employed male unit.in.the-capital city of each state. t The consumer price index is also that for the capital cities. No alternative state 'compilations are avail- able. The source for both series is the Commonwealth 'Bureau of Census and,Statiptics, Quarterly Summary of Australian Statistics. SN, SV, SQ, SS, These are dummy variables. for each state exceptuTasmania which is- the excluded category. The dummy varihbles ploy the first letter of the name of the other five bates. t I. O ; t. ,; O :294 . AUSTRALIA, cakarterly, Me - 196e( 3 ) -197 ( 4 )- 1-4 QUARTER 4 " EA ED TP1 TP2. LPL. WC J- 31 401.00057'6.00721.CCO 796..0001573.001289.06 53)400.538000.53'8100. 983054)1°-11023.1(.4270, At, 558600.346400. .,94.7800.98.7.600101.610 64 606.000624-.000349.000' 1098.0U1502.001477.03 538700.541000.,538/CC. 112450.114325.11620C. 32980'0.,33350C. '100.230104.56010/0.420 - 7 544(100.' 110575. - 348(100. ff. 97:3900 11,9 a 625t060796.000897:000-1218.00111,0.00 2127.001100.001424.0018/9.001376.00 .551000-..549700.547600.55O5C0. ' 107977..108218.1G8459.108700.'? '355700.320600.331900. 104.470109.680103.400'102.87,0 1312 634.000756.000 1421.001747..00 559300.560500. 108887,107735. 1 I 339200. `1,10.240111.530 .15 lo14 o. 696.000G6C.000533.000 905.00(11405.001645.00 588000..565000. 62600. . 111491..112342.116039. 34070-0.356000,327500.-- 115.671r"120.980"107.390 ld17 451.000744.000 613.00U1217.00- 570700.5729GC. . , 413086.112714. 328000.3'42400. 22.880117..00 . . 15 872.000 1735.00 575600. .113458:, 4950C.341200. 116.300 ". -21 20 551..000751.000777,000 9.0.1588.001460.00 C00 585300.583100.579500. ' -1i4448.115066. 331600.3.29300. 12-24,22.0.,24.170 22 ' 117.240 2423 -1148.00987.000 1739.00./978.00 590600.5868CC. 115684.116301. 335400.350000.--. ' '1Z5.980 . 252627 '135C,005211..000906.000_ 002.0'0.817.0001446.00 593900.592700.596200. 118752.117148.117935. 3613001._311700. 120.900129.860132.200124s380 .1t282 1008:110 510.2499.00 C00 60k600.6C1900. 800. 119513.119,541.119569. 356400.34750,G. .- 134.640128.030 is. ** 14M. UL AUSTRALIA, (siontinued ) kPA QARA QARO IA k ' . 101.690 - 6671400 , 5/.0000 C.3419CC 2,081.00 e43 .. 99.E500200.8601pt.75,0 9C30.00920.0018916.0 57.0000540000 0.3437000.26510C0.3054000.244800 0.3408000.255800C.312800 2166.002260.002115.00 b . . 99.800099,5000 0528.0021983.0 57.000012.0000 0.339400 0.3227000.343400 4U35:0Q1954.00 , ': 8/ . 99.110098.3300 8617.009409.00 72.000072.0000 0.4237000.316700G.402600' % 0.4396000,358000 .2272.002271.00 9 . 97.5500 5847.00 72.0090 0.356800 .4 , 0,351100 . . 2154.00 x 1210IL ... 98'4.550099.310099.2600 23361,0515.5.007666.00'' 83.0000 0.37776180,3355C0 . .,0.3194000.333400 2305.001972.00 t:" t-$t 1413 k . 97.170057.,9C0 2483C.O.5824.00- 37.000087.000087.000 0,3551000.2776000.381400 0.266000c.0.364100 08 1.02 2139.00221943:0000 V 161715 ., 102.620101.750102.370103.700 .7C30.00 29592.07706.008094.00 106.000104.00092.0000104.000 0.2336000.3095000.3060000.350200 0.2212000.357200C.2959000.330900 2000%002189.002102:001775.00 2U19 . 108.740 11891.0 ' 106,0.00 0.298900 ' 0.322100 2181.00 '22 2321 . 102.490'119.460104,920106.850 1.9814.040830.010965.011453.0 192.00019r.000192.000 0,2883000.31820002419000.295200 0.2778000.3650000.238000C.320500 M ,_ 1726.00 2361.00.2075.002284.00 262425 4, . 1.18.1130121.280119.610 47415.014835.018082.0 , 192.000122.000 0.2994000.301400, :. 0.304000.0.331400 . 2384,002151.00 27 - . 125.05U. 15934.0 239.0100239.000 0.3379000.210000. , 0.3155000.198600 2137,001.00000 tN). 292830 ".. ... 125,750124.230130.410 43143.010676.014466.0.. *MI 239.000234.009 0.3482000.2488000.351100 ' 0,175700,0.4499000.551700 .1.000001.00000 .71 ... . _____... ---, QUARTER . 'tk PC -AUSTPALTA (oim'cinued 543 . - 0.65C00C,O.:6400u0,.o.b2g000-0.63COA 86 1 . ,0.63C000 0.58000UC.55CCCC ( '11 10 9. .. 0.48C000.0.5400000.0500000:61C000 . . . ,, 4 . t . c.) 1213 .% 0.480000 , ) 16/5,14 , ... 0.4.'000000.400000C.41C000C.48C000 '. t $ . 1917.18 ... 0.3900000.420000.0.41C000 .. 4 222021 4...- * . 0.36C0000.3700600.37C000 23 . . ' 25-24 ' .4. . 0..3%00000:35C0000.350000 ' . 4 U*282927 4,. .0.3200000.32C0000.32C'0000.3301:100 -30 .- .'. 0.320000 ). 2 .10 \ QUARTER EA GREATEU, BRITAIN, quarterly, LEt 5:966(,3)-19730) LF2 WC 21' 5378.00781 f.. 00 861182:.0 77 0.150000E 07 0/ 0.146650EG. 14497CE 08,.. 99.520097.9100 99.7200101.360 *Ike ' 5883:00 .00 0.143400E0.1467001 07 0.142460E 08 9 7.4500 .. 99.0200 . . 0, 140500E 07 .99.6700 .5 67 6294.005397.003362.00 62664C9.009013.0010029372.00 7 .t.tt) 3.0 0.0.145500E0.148000E lft250Gt 07C7 / 0.14 X.1400.1440.1435 206 CE 98 08 UECE' 08 103.230101.430ICI. 400 98.580098.8200101.310100.700 : 121110 9a .59184,00,4221.003648.005343.00.370S:002984.00 6316.005651.005693.0064C7.007951 .00 - 10.120300E0.122500E00.127500E0.130000E 07.125000E 07C707 0;.10.140270E0.140200E0.141690E0.141 1510E 78CE 08 08Ob08 104.1201C3.160102.910105.250103.780 100.5101104.101.500103.100105.170 1QU wk 1413 3807.00/243.00 73471131 ,00 C.0 0.118400E0.11940'0E 07 0.140350E0.149870E 08 08. - 106.990105.950 1.0103.410 1.670 1710.18,15 6380.004213.00 /ft '8'365.0011178.07669.001006 C.0 0.115800E0..116100E0.0.1173C0b 1164COE 0707 0.138320E0.138240E0.138350E0.138800E 08 08"08 1108.450 112.000110.89012.980 .99.9300124.920118.470121.350 7334.00 ' n. 2U19 41 5720190-784t0:004000.00 "9286.001465.8.011698.0 0.115500E0.115200E 07 07 114100E 07 ...,0.134Q10E 08 0.135420E0.135790E 08 08 113.180112.550113.240 121.820124.450115.950 qP 9737.00 b :414'25 ciE ' , 242321224' 4 60'61.00'6799.007189.0.0 " 1006C.0tb0d2. - 0.111900E04110700E 0707.1115OVE "be 0 0.133280E.134 180E 08 08 .118.115.3401611.410 240 . f1:19: 118.34076b131.790 -a 2526 . 1-490.099447,00._ . . " 10369.013126.0 0.109200E 07 0.134590E. 08_ 1 21.860 124.920 f .. 2827 3508.00:5140E.00 7668.00 .0.106200E041:67100E 04 Oi 0 0.135760E0.135300E'..145150E 08 08 1 22.990122.0.20 ' ,121.520128.400° JDN29;N), " 4077.00 7102.00 18:4.00 0.107300E0,11048;30E 0.707 0.135630E 08 '125.01g 125.790. 4 ; I C1REAT BRITAIN (continued) QUARTER 02 ow - A-DA QARA ETOV 6)1 2I . 253600. 461230. . 00615406 U.0 57.99.00 43 .... 421C00.'373CCC. 230330.12.68c3.197751: - . . 0.504600u..4b1GuJ.G.41/4,6300 '0.0 0.60;0 99.330098.7400160.1711 65 - .... 4D1000.424C00.378W6. 205548.300154. . (..4411000.581100 0.0C.0 99.6600 7 . . , Apc.840 . .477CUC. 199634. 102.260 a s . ., 429600.- 8820 1 »'0 : '0.J533060.437500 0.0C.0 104.690 10 9 . 448000. .v. ' 262.759. '.U.452.7U0 0.5986C0 , 0.0.0.0 .. 106,530105.280 ,.. '45/000. .'231622. . 11 484C0C.4 . 224682. 6.-3115uu "0.0 1.08.630 12 . ' , 1204E80 14.LJ . * i415000:' 4550D0.' 192741. - 0.6093040.42726D , 0.0 r 110.390116.550 1516 . 450000.517600,48-3600. ' 182395.1290C3.138589. .0.463700.40.3202000.431660 U.00.Q0.0 116.830114.076111,980 1817- . 487000.513000. 122C9.2057C7. . 0.401900u.56590U , 0,0 120.600118.170 . 0.0. 2019 ,1 '590000.589000, 93367..022306o. 0.441300C.3500CC 0.0C.0 , ' 123.870128.310 222123 iii .n 132600.648000,0'780600iw.67160.4f 153470.210736.110230. . 0.5029000,038430G.0.586600 0.0_:,0.0a.0 , 133.750_131.740130.070 . , 2524 , .. ). 699t00,0 207615.5026C.0 0.6596000.412600 , , . U.01.000o0 .136.240138.530 ,27 26- 569C00.620000. 183941.103739. 0.5061000.474300 , 1.00000 141.880144,0390 ' . '1.0000 . IN 2928* _...... '462000.453000. 183855.161343. 0.4247000.422000 _ 1.060001... paoop 151.260148.990- 17AR ED IF CANADA, annual, by region, 19604973 WC WM U QAR D 19691969 .-1043.00,1872.091716.00' 1,400111400.1. . 0.2-0.158325E.452500. 031.58E e. 07_07 4.950005.270004.22000 as 2.40000 122830.40500.0 0.2660460.284119 19701969 1901.001060.001615.00 0.166733E0.149267E457580. 07, 07 5.190994.524045.16000 2.448582.453392.40000'2.490.99. 140750.41660.0576.70.066910.0 0.2865540.2817520.3065360.265457 19711970 919.0001816.001884.001735.00 0.153025E0.208867E466920. 0707 4.801935.372705.55556- '2.420142.60870,2;43665 , 47420.096160.095170.0 0.2697890.3486270.28635r '1072 1972'19711971 ,1132.0022210,001173.001575.90 0.164467E0.213825e0.162681E0.156792E 07'477750..0h07 s - - 5.60377 50;736795.013895.944395.50529 2,547172.667892.588692.59865 . .90750.0,152660.5'0750.0117170. "0.297394'0.3637210.3191180.254836. 1972'1972 1308.001838.00 0.160417E0.221133E,07 07 i'.6.18433- 5.96364 2.68767-2.67281 ' 111660.147920. ' 0.152919.0.406628 '1973 1973 - 609.000386.000315.000520.000 0.165350E0.227050E,0.17-0-1 -T-E --0707501920. ,- 6.032426.19828.5.777595.05522 *2.803742.815702,2.86707..2.63636 8448 -:.834280.0 50500.0134750.94420.0 0.1121070.1063010.1036870.359341 - _ 0021'11 ' 0* 0- , - - " ' 4W r, 0014'511000'911 - 0000Q 'I 0 ' 0 .. 00 000'1 0'00°0 . . '04'00 "0'0 0 "' £46I.'EatCat 0004'01100/ L11 0'0' ' -00000'1 . 4 "' Cal 0051'801 00000 "1 0'0 - 0'0 0'0 0'0 . . - U6'- 006'1/0100/.°801 -_ 0'0 0 00 00 000 "I 0 (:) ' . -000bizei , 0 090 ' Z.L6V3LMT ' * 4 , 00£'470r-00 0 "901 00000 1 0 ' 0 . 0.00 0 - 0'0.0 0 1.1,61;rk6T 606"E01 -' " 00 000 'I . - ' ' 0'0 0'0 -4' Ttht --t -009.°Z01001°Z0100E'EOI005"C01 00000: 1 , .crto00'0 ' 0 ' -0'00.0o-o 0.giooti-.1 P0 ' 0. " ' 0 ' 046T 0k6t-0 /1L61 4K ,006'101- 0'0 . -000001j. ....-o-o- 0'0 -s' 00000'1 0 0 ' 0L61696T 000'001000'00'1 00000 '1 - 0.6 0 0 . 0' 0 oO -" , 6961' moopolowool d. - 0"0, oob ------r.....oob000l 0'0 00000.1 0'0 ey...... " , 6961 1d0 ( pane cwoc: ) vcznivo. I'S t WS MX .., ( ) QUARTER EA UNITED STATES, quarterly., .TP1 1966( 3 )-197141 TP3 - i4C Eo es ' 14823'9. 0.911400E0.911600E 07 07 0.11006080.1 088608 08 , 0.420600E 07 - . 49897.371864-039516.056566.0 95264.0409668. 0.911000E0.9112 00E 07 0.112450:111260E' OE 080!06 0.31640080.33230980.376600E -'07... 07 07 164.030192.210 1.550 :' 8 . 5426851795. 6 9143. 0 3.0 99501123869.125467.107772.13042\3. .0 0.928900E0.934700E0.924500E0.920000E0.915500E 07 07 '0:113850E0.1,15230E0.113150E0.116290E0,1145508 13808 0,441700E0.382300E0.30790080.325300E0.4144008 07. 07.07.07 101.120102.930101.770102.280102.900 10 41199.03645458. 587.0 0 "0111125955.. 1 2144461. 2 8 2 8. 0.0.946300E0.940500E 952000E 0707 0.11841080.117350E0.1194808 b808 - 0.334600E-0.395600E0:340400E 07 07 .103.030104.7330103.850. f("-12 161413 k 31821%49562.38461'.037246.0 0 '122481105.0,93,46041.09160:0 0.966200E0..980600E0.973300E0.959100E 07 07D7 .0.123100E0.1"2433080.120690E0.121890E ,080808Ot 0.352000E-0.409800E0.35990080.4578008 07 07*07 102.400104.350104.090:102.290105.2.70 19 33868.040942.37006.031582.0 0 84852.-096553.087616.0100625. 0.100120E0.995900E0.990800E0.985,7008 07,070807 0.12974080.128380E0.12703080.125680E .0808 -, 0.3751008.0,465200'E 070.421100E0.363400E 07, 07 .- 102.450103.980 20 34616.g 112541. 0.1,00700E 08 0.129880E 08 ' 0.4844008 07 102.690104.250 125242322 , 38329.0"362°69.32029.43 994.. 0 86673.0,85441.0140167.,89989.0 0.102440E`080.101860E0.1.02910F...080.1012808 08 08 ...0.s.Q9910c_..0.130300EC6A301608Qi1S00208 0808 .0.453400E-0.3931008.0.395200E 07 07 07 '105.690106.010107.,700105.930 2726 ._ .---584240 46215. 0 . .98428.0 79475,0 0.103380E0.1038508 08 0.132130E0.131520E 08 Of(98 .1... --.? 0.47250087-0.4213008 07 Co0.407,400e Al 4 §P 9.L91 07_ 07 _ 1_08.109.630 080_ 34414.247711.0 )71072.0,,- 0.1043308 08 0.132720E 08 . 41524.0 98279.0 0,..10457.08 08 8 - 108.620 - st 0.104810E, 0.8 __,109. 6,40 31 . 41409;038122.0 8851675980.6 .0 0.1050508 08 k13455080.133336E_0.133940E -0 0 0.43570080.533200E.0.449500E 07,07 4 07 J_04. 38d 107.750 UNITED STATES ti cont . " , WM2 111 QA R02 , ' . 01ZARTER RPA s r 4 IA .$1 '2 99.'510099.'5700100.120 ' 396000.436 00.00. ' f .1.00000,-2323.. 00L.00000_ .. .1111141e \r1 15.'228440.2.523030.2293 0.7842860..130768 43588.097621,40107688. 76351.* I ' 102:43'097.8600103.62099.0100 , 4490000.:48300064-27000.484000. -'2620.2448.00'3541.001.00000 Go ,?,0.287823'0.2327640:2528960.247136 :04;19035.0.1960540..2253090.198543' 77169.096749:0580714,069770.0 4 ', 11 28 81 . '101.330.1031 660102.490104.780 .454000.387000.463000. 2475.0024.024002416.00 6:288696_0:2925120.2525140.10024 ,-,021258530.2410860.228515.0.20744041195666 92200,036477.0)106234.° 9089.0 15 S. 110.970105.540106.920100.790 4 - 484000. 411000.49200443000: 0. C2465,4'002760).002729.002647.700 .0.2180'720.3284650.2584640.262740 0.2221820.1976760.2197400:234219. 81387.073040.0 16'17 109.360 623000. 2777.00 0.190773 ,0.194427 25425.067123.053739.0 ' ' X19 2018 " ' '111.340. ,.108.190 112.71016'7.140 . 4..629000. 66500657000. 2777.002887.003168.00. '- . 0.2408040.3187960.197454 - 1 0.2073740.1758120.162188 27978.0:53889.044171,0 21 ." 7000Q0. 0:227438 , 0.209003, 30061.0 22 ,189.b.80110..200.158.360 , 777000.732000.664000.. .6248.00-3807.0b 4574.00'-5407:00 0.1775420.2606010.935088E -.01 0.1678030.1726690.1&8491 419.00010743.08092.00. 26 188.350192.340 696000.*715006., 6568.00 0.1992330.131435 , .188853.16.5042 19589.0,:,14368.0 .2927, - 190.420'185.570195.140198.700 666000.617000.640000. i" b. - 6161.006459.006325.00 6.218609::0.1373780.121753 O04..92848E-01 7647 :8E -01 180497 231.000281.00014318.0. Al . 30 77 - /94.760 190.2661t '627000.-693000.676000. ' 7285.005702.005851.00 .6.2401500.2565850.193196_1-, ;0.1044780-1247;60 96419,8E-01 _1.00990J.,000001.00000 \:1 73,68.00 , 0 laITED STATES' ( ccOntinued . I D 141i*C44...1-0 -UARTER 0.530000 .P0 '^^197. 8000 CPI .\; . 123 49801.097642.043625.010730. ' i .0M00000 ,0300000.666000 , 198.7000V99.99,, 5000 ;.:!%000 ' 0 O - 7 , 5 6 .772.09.0968'00.05,8108.0. -,0.:"5000000.6200000.510000 0.500'2.4001.300 "a g . 11 1-0< 98 ', 49'135.094838836.0111480. f 2.0 : .0.4700000.520000.0.4500000.540000 ' .#104.800,406.100103.500 .12.13 82458.079087. Q 0.3600000.420000 '' . ' 10i:300109.100112.200110.722.' 4161,715 -44187..0-28567.0.53765.0.70966:0 " "0.390000. .. ,0.410000 ° 0.4300000.430000 1.15.700117.000113.90D ' 4 . 1 28045.053927.0 ' 0:4100000.420000 1194509118.600 ...... 23.#2 1, 8102.0010743:30071.0419.'000 0 , ' 0.3300000.3400000.320000 122.700112.000120.800123:700 24 1 , 14377.0' r 0.320000 ' 124.7'00 ----,,, -,. 27y,2$, . 281:00014318.019589.0 0.2900{00.3000000:310000, ' 128.126.90012.5.800 700 k ,.?a 234.000: 0.29000'Q . 131.500 ...- 1.00000 0.290000 - 13'4.400 Ni:0,.) ' qiig' .- 1.00000 1.00000 `,^..._ 1'. 'Vs',,, 290000. 0.290000 -- .11.400- -131.600. ft' - AUSTRALIA, quarterly by siatel , 4 : 1966 - 3(w)YEAR-QTR1966, .,169 109 EA -290786211825 TP 0.0208.29 sc. 0.623559 UM 1966(3)-19736J- 165528_02- U . 0.3234420.219196 QA RA' 637719 IA CPI98.9 1966 -- 33(w)340 (s) 3(v) 108 7096 110402 5640371966 0.5760220.6319510.580032-0:.5-50*-4 0 0.620.62,54560.6235590.623559' 4190 " 407922248237''.;-0/479452 0.20.4931510.275Q72 20323 2261.85-225 89 98.998.898.698.9 19661966:-19-66 =-- '434 (T) .11.5 62768118 '293700;11179043814'72876'23603 .0.550795O.5797390.5797390.6506020.638.)38 0.010.'6191770.0173170.625456 8556 ,5574-5911 3819-,0.253125L929 '0.2405060.3229170.1742.42 262,729659198 99.699.998.699. 7 '1966-.19671966 -4 196719661 - 4. - 4. 1 1.63175'17 48 215803296614.57,72823906 0.602'398*0.5997980.599194 0.621673-0.6210470.018556,0.6192000.618581 18983246 796891 _ O.160403 0.3048860.3269230.489796 581798177 9Q :99.799.-299.3 19671967 - 1 7 1 120145 81 113178 73786 ; 0.5516960.5284420.598300, 0.610.010.617964 7348 7964 23791150 314 '0.4475140.4511280.255282 238259279 100.2100. 2. 19671967 .-7- 1 " s- 2 173260 30 299528,5905324209 '0.5515900.56630.635015 01 0.6155070;613749- 21763327 '":0.'349495282 as 0.5172410.264766 599769105 101.110046100.3 e'-'4.44.00-' .1967 - -2 19671967 - 2- 2 11#'208 71 114566217792* ,03,8,13 0.20.6407480.559406 "AAA 3' 0.6113300.6143560.61 0728 _11821563 , .0.4333330.481481 264158306 ,101.6101.5101.0 196719611967 - 3- 3 2' '147204226''' 17 - 302442219781115994.7464 0.63LL0.56210.6423710: 0.5807095)362'07, 95 79 0.6111760.6117700.6.11330-.0.6107280.61.3561 -35725861739 425881T25 ; 7.94*272222 0.430070'0.495146a.0.21O. 371728240682 5190 303673587' 70 . -102.8101.102.91101.6 02..5 "5 067196719611967- -_3 - 3 3 t, 123 3680 :61703305356 248175606 5 V.5973590.655300.5847950 564Z9 51 9 0.6035510.6165690.612963 5449, 246351 .0.461538.0.2640220.487805 670190210 72 104102.0102.6 2 ,. 1.967 1967- 4 - 4 493 141120 94 22177011734276916 0.596116.0.6039210.669894 *-0.6105820.6146-088090.611176 6569 291942827313 ; 0:33935004.294e400.463816 511177340 1102.9 03. 0 -V* 1967 - 4 '4 1243 '25118.63028 0.6028570.621439 . - 0.6135610.598952 1118 902 0.4000000.270440 195 61 '1 05.0102.0102.5 YEAR -QTR EA TP AUSTRALIA. ( oritinue,,WC ) WM 0ARA I A 'CPI_ .1968 1968 --' .1I (s),(N). I N) CO 2353Q8311175 118730223759308270 77 426 0.57.10490.536o0.61/7530.620155 09 'p.6058770.6129630.6058770.609399 2759123653315 319 402 _ 0.5162240.29339,60.4459200.441261 -239775677313 102.103.81034103.2 o sts 19681968 -T ,I2 (w)2 I (:i) .157281229'136 51 . 22575131118612Q119,25421643 53 0.6517170.5635360.57ol.0.6509610.589719 08 0.6018180.6058770.6000950.604712'0:609990 12022-8462604,249 - , 0.4209560.4460230.154670..387586O. 529183 .346204605834 64 .1"10 04. 4. 85103.8104.0103.1 - 1968.1968 - -_22 1109 " 73. . 6567978337 0.6182690.588292 0.6047120.6035.51 1097 0.3705580.465812 209194 104.`0104.2 -196819681968 -- 2 ' 3 .3' 3 .441-121217 48 2275,01313687121350 25722 '0.6517600.6018380.577841 - 'O.598383. 0.6023950.601243'0.600669 19442026 358727510 ,0.374130.3915860.27630.738461 76 290659744 83 d 404.04.7104.6105.1,y 4 `196819681968 - 3 101" 42 ' 69' i 6681779132 0.59%93080.620326 0.0.6029720.603551 598952 * . 278343807 10 -0.610.417355 7647 . 439490 opt 197 7292 104.3104.2 `1966 1968 - 34 4. '116 219145 316188'1225x1'2292511 2595a 0.6144350.0.701$050.570190 691: 09 .0.611681Ô.607641-0.608215 390481846V44- ' .0e3487181-0.10.332322 3Q78560.347305 - 669269507_ ,., 405.0.105.9106.010'5. 3 ea WC '.1968 19681969 - 14 ' `,14 ' 300260.24 5268 231001318689 679552619479927 0.6264260.6594750.6607310,632320.658003 5. 0.6122620.607404'0.6087900.6140130.607974 2292277424701070- ; 989 0.2594810.3823530.4081630.369231 '21922T325758,66ii -81 104.9106.6106.7105.105.2 8 19691969 -; - 1r 1 V 230~48170 96 - 1'23812 26436909380722 0 0.0.6373110.6047390,585366 59o2 44 0.6085450.6137310.6143130.612571 21141054 394'527 10.10.489914 3622457256 64 571429 251104201 '10 5.6105.5106.5105..8 1969 - 1 - 2 256192 232753321190 .0.698885.4 0.602323 25671908 01 . 440 86 61-Z_74q 19691969 '- 2--'2 2,2 18696 3870 Y 125043 -2666570231_,81516 0.6308410.62.'9400.6331140.695395 0.6096900.6045710.605-7010.609116 1406 408544833 0.3692310.45783100.398340 . 4.72923 . 408791 ,103-20619_53341_ 107.0106.4106,3_107.2 Of+ AU5TRAL1A (continued) I YEAR -QTR - 3(t4) EA TP WM U I, QARA IA CPL. r ., *71969 1969 3003(c45 - 252170152 '323411 1258922345444 0:10. 76952 06320 0.5978780.602323, 20851517 850 0.1009900 332893 333695639 107.6108.84 CL 19691069 :=-:- 3 CO 360. 658924,'678 .71462696382335 0.68U5.940.6484690.63097 ' -` 0.603445 0.6010.6062680.604571 764 452344576 0.2825400.5029590.467626 220184 72 ' 1 07.106.9107.2 7 1969 - 4 . 3(r) - .121 236435325632 . 70.74o)0.74.4.p.150.64.» 96 76 0.5984300.591332 '8321 387-27903 0.3017460.3200000.245255 625733 '108.3 109.6'107.4 1969,19691969 - =4 4 10 i 47.73 12674/,72341183154 0.7175710.6794040.662051 0.5962280.60400710.600649 . .1:01626 53 0.2716760.2,713750..294461 231320165 1,07'.10-8.7'107.9 3 1969 - 4 229 28 327853 27261 ' '0.68..1026 0.599537 23001065 0.417910 . 585 65 -.108.1 19701970 - 1 - 1 180179190113- 2382127.590 76 7339683973 0.66/5100.6204290.-6051420.68,4.2770.674456 ,0.64160.635851'0.6446490.6278 0.6416900 3 208210241746 603e 0.3386810.3531250.4195800.0.249184 430288 .3.70611192264 -1-08:9 ' . 111.3109.9108.0108.4 970.,-19701970'",.1970.;-1970 1 -"2 -12 2 2 107 114178113163 58 330073128438240118 847902755974452 ,0:66d1820.70U1800.600979*0.654240.730a0.728964 0-3 0.6352730.63701;00.0.6189550.6416,90, 634696 2575"'.2202 1159 95133853 00.2284980.4130430.3074710.3253490.604167 .:386986 2246,77734213278 80. 11144110.0,1110.1112.22108.9 09. 7 1970--19701970 - 72 3 153215 22 331482 27858 0.6763950.73399 . 0.'6135210.6375910.627289' 2822 390 - 0.372881 0.240492 . 597667 63 lir.11 6 14 1 , 19701970 - 7 3 116 98 '241385129287 85508 0.66,4600.69L4'480.741644 0..6358510.62898'30.631256 - ' 10142054.368 814 0.3202610.3005180:301775 - 254188 1 10.7 19.9 4e? 1970 z- 3 4 ..... 144105 322891 7546,4 - 0.7719450.6733.210.721326 0.6341200.62610.614728 65 17656W 634 ' 0.2178520.0.589744 403846 .371233 61 110.2116.2 11.6 19701970 7 4, 4 . ti :87 81 , 242652.130136 0.6940.777387 46 0.6335390.637478 4191,9263 0.2852460.163306 .39367 113.3 319701970 - -44. 66.47 '8622676476' 0.7563660.7039360.714413 -0.63.0.642039 86120.632423 1.56329301079 '0.38.15030:0.108312 338983 . /41._280. 77 111.8112.4113.5 4. 1 YEAR-QTR I ) A TP .AITS T RA IA ( continued ) aIC, WM U QARA IA, CPI 1971 - 1(m) 237.184 2439193343'00 0.73:1)090.721465 0.6548550.076165 31253533 0.207910-0.331933 '593623 ' 113.7117..4 - 19711971 - 10201(m)- 1.(s) 1(w) 118/59136 130985 8694477488 0.7203830,.6749340.65789 0.6809570.6679410.669686 .13-71 23641163 0.0.4297300:268245 3/3288 - 251255379 114.8112.9115.1 1971 - 1 Cr) 2 203187 33 245187335709 28473 0.6572440.7913070.77)4.59 0.6417360.6673610.079152. .32933648 335 0.2164350.4342100.359929 731736, 80 - 119.8., 115.2.113.2 197119711971--1971 - 2- -22 2 103156 3186 1-31833 286781850187661 0.7373470.7714780.7,103720.703372 0.6554730.670855.0:0604810.666204 1348147837401188498 '-.0.411609'0.3598330.3875000.2688310.325949 282183704 88 , .:,"1.-14). 4 .114.6 123.3115.4117.2 -- .. 1971 - 3 2071431781971' 92 245049132051335091 .0.69)7980.7811160.749392 0.6599140.0460500.623520 30881333 0.4144930.228205 .595131.329 s' 119.0116.5 197'11971 -- '33 - 3 3689 33/4.473 790038773128680 0.7901020.727339'0.70214,6 0.6599140.655973 15109 1258 570976 - 0.4090910.3320900.313993 569252 64. 116.5'116.5117.2 19711971 r'r-4- 4- 4 165143 699049 244911132269 8780179505 0.74.33730.8045110.7923030.7903800.733,718 0.6455080.6422720.6101590.6380080.633800. 12514 25944061549591588 0.1664410.2610760.2311320.2651a50.255682 436233272155 61 .119.7 1.2.Q.120.5-121.3126.0119.1 3.. 197219711972 -- -4 1 1, . 338336 35 (282822447733338 55.'0.74)036 0.7253440.734041 0.7492130.7103690.639069. 69225148 Q.2276420.291883'0.636364 318771731 ,120.7127. - : -1972' 1972 - 2 -.1972 1'19721972 - 1 1 188163290127 X46 .132487 ,333237 286848000787871 .0.6913480.'6821480.7443630.780545 0.7479740.7523240.7376020.720856,0.742447 45666638214130371882 684 0.4168510.2384870,3342110.266340 .. . 255214__674721 121.8120.x,122.6.,128.5 1972L9721972- -- .22- 2 ' .230137146152 132707244635' 8050787939 0:7644190.738i'330.7370550.771944 . 0.7592620.75240.764905'0.7494340.759885 78 191623171864 Attismo0.376238-0.2622:80.4591190.359580 228414277 70 123.11.2123.6122.0 1 o ..r AUSTRALIA. (continued) ..Cr - . , 1972YEAR-QTR1,972 - '-'-'301) 3Cti 283203 EA 333838245325 TP 0.7982440.16u253 0.749434'0.710898 ,WM 41015575 U '0.2352260.271073 QA RA 53T697 IA ',CPI123.o130.3 .1 ,1972"1972 - 1972L9723(w) -,3(e0- 43(TY 142103130119 56 334439133268 288468122588236 0:8166670.7293350.7612180.7276420.740770 0.7017420.j422270.7530890:7434190.750648 19135 229517761333 755 -0.487972,0.171278 0.4000000.4117650.255583 741'271189'354101 123.4124.8123.0124.6132.0 '1972191972 72 -zr- 44 -78121 133829246015 88533 0.7713200.7774510.841600 .0.7452130.7316140.741040 13329 55614691 0.3076920.2052630.152393 226-508314 124.1 .6 25.0 1 ° ' 1972 21,4 (42,- 81941 0.790104 0.139266 2759 . 0.350365 266 125.3 .1973 - 119719731972 - 1 14 195378 36 .335040246705134390 29004 0.7873700.716210'0.7602630.747400 0.7731840.7828640.7433130.140448 1980427857981940 0.2959560.4556960.3864970.284424 .182 1 1/4 129.4127.8134.6125.1 1971.-1973 - 1 1. 61171193 ' 8266188830 0.7519560.714961 0.787795 15331622 0.414044-0.360748 11 127.81270 19731973 - 7-2. 21 315264.- 52 247393335640 29162 .13.8133030.8061960.684706 0.7763690432864.7 4706 38485035 723 0.3421050.3010260.323077 11,1 132.3138.8127.5 197319711973/973 - 7-.2 2 2 11159 117136 .83377134950 89128 0.769113)0.7960430.7572990.7707.24 0.8200910.8188450.8047800.814512 1471166A'1617.: 0.432127771 0.3900000.3726030..53398 . IA,1 133.9.130.43131.4131.6 197319131 - 3 973 - 3 - 5, 1L97 1.16204 57.2932995 '135558'7336496248617 89483, 0.7684980.74o772,0.7793200.820175 0.7730270.7478140.7894500.7877190.823853_ 27944070-1393 963. 0.4094830.1035530.1729900.290990 11 139.4144.1 197319 - 3 - 3, - 108 23 .0. 3405429464'. 0.7514790.80664.8 0.797041....0.801786 64681,0 ,o. 0.426877348485 11 135.2134.4' APPENDIX TABLE 4.1 REGRESSION ANALYSIS: ENLISTMENT SUPPLY, AUSTRALIA, quarterly, 1966(3)-1973(4). Variable 'tcluation Equatibn 2' Equation 3 . CoefficientEqua'tidh (t-statistic) 4 EqUation 5 Equation 6 Equation 7 Equazilvl 8, Dependent Variable LERA * LERA 0.2509LERD 0.2008LERD LERA LERA LERD LERD LWCLWR (-0.47494N-0.2703 (-0.12,5)-0.0929 (0.3251) (1 "fti\.2232) X-0.6851)-0.9514 (-0.445).)-0.7081 (0,0751)0.1317 (0.0049)0.0091 LURLWM 0.3431 4 0.3576 (1.0062) 0.1743 " 0.1634. 1 (0.8545) (2.2400)(0.1297)0.37230.0881 (-0.0275)-0.0422(2.0600)0.3846 (-0.3109)-0.2996(0.8329)0.1862 ° (-0.2548)-0.2852(0.7424)0.1832 LQARA/D (5.2019)(2:2104) 1.1239 (4.6376)(2.0453) 1.1367 , (5.4805)0.9336 (5.1846)0.9348 (4.4230) 1.0727 (3.7730) 1.0871 (5-2.2414.f0.9315 ' (4.9859)0.9316 LPOLtRA (-0.0046)-0.0013(1.4274).0.0201 (0.1004)(0.9505)0.03010.0154- (0.1397)(0.1793)0.04150.0032 , 0.0057 (0.0746)(0.2833)0.0239 ,-0.1681(- 0.4051)(1.0908)0.017* (-0.2564)'(0.7968)-0.1125 0.0144 (0.0004)(0.1044)0.00020.0022 (-0.0673)-0.0438(0.1773)0.0042* s' -LRPRA. S1 . (1,1441) (0.0898)0.06070.0129 (1.0057)(0.0365)0,06370.0055 (1.3077)0.172 (1.2274)410.1184----7--=-0.0572 (1.0421),(0.32990.054 (0.9499)(0.2450)0.04260.0625 (1;2770)0.1178 (1.1984)0.1196 S2 (-28393)-0.5357 . (-2.6800)-0.5612 - -0.4630 1-1.9425) (-1.5786)-0.4366 0.2403 . (-2.8310)-0.5649 0.1260 11-2.63411 -0.5853 0.1421 (-0416)-0.4741 0.1882 (-1.4468)-0.4552 0.2296 LGLERA/DS3 (2:7595)0.1666 (1.2218)0.00360.1716 (2.0372) 0,1945 (1.4764)0.0709 (1.2922)' (0.84)0.008,14. (1.2721) (1.1757)0.0751 . CONSTANT 2 4.5703)0.92901.0800 (-0' 019S)(1.2999)0.9176'1.0255 (3.9965)0.88061.9573 (3.1666)(0.3651)0.87091.8804 (0.6805)4.90250.9307 .(0.0439)(0.503)0.91834.2451 (0:2954)0.8807'2.6693 (0.3205)(0.3757)0.87103.0435 ND-WR 29 1.4161 2 1.3757 29 1.8453 28 1.7879: ' 29 1.4563 28 1.4112 29 1.8452 28 1.7887 Nan JI APPENDIX TALE 4.2. A y, REGRESSION ANALYSIS: ENLISTMENT SUPPLY, GREAT BRITAIN, quarterly, 1966(3)-1973(3). o4 Variable Coefficient (tzstatiatic) ' Dependent Equation 1 Equation 2 Equation 3. Equation 4 , Equation 5 Equation 6 Equation 7 Equation 8 Variable . LERA LERA LERD, LE LERA LERA . LEAD LERD LWCLWR. (-0590)-1.5190 -» i ' (-2.1246)-1.4367. (-1.9512)-1.5788 ' (-1,8424)-1% 688 - -1.1501 . 1 . =1.9917 ' 70.5829 -1.7263 .LWM ,, .- (-0.8437)(2.0472) 1.4604 (-04894)(4929) 1.2982 (-1.3282)(1.9093) 1.5939 (-1.3874)(1.8426)43.64.1111.6249 LADRALQARALUR -0.0692(4.7047)(3i,82700.79380.9048 -0.0775(4.8644)(3.5508)0.83081.0584 (2.9502)0.7913 (1.9333),0:6098 * -0.0602-0.8121(4.476b)(3.6928)0.8989 -0.0606(4.6865)(3.4890)0.87031.9546 6(2.8797) 0.8028 0.5112) ETDV '.. . (- 1.0047) 0.0836 (-1.0935) -0.9672 -0.0814 (-0.7816)-0.1058 (-0.7877)-0.1376 4-0.0584 -0.0480 S1 (-0.046) 0.0493 (-0.9165)-0.0860' 0.0584' (-0.6844) 0.2379 (-0.8665) 0.2316 ... ' (-6.8844) 0.0377 (-1.1075) 0.0360 (-0.48,01), 0.2372 (-0.3730) 0.2285 . (0,6799) ' (0.7865)N (4.261,9) . (3.8999) (0.4502) (0.4317) (4.1315) (3.7334) S2A (-5.4011)-0.3698 (-4'4397)-040224 ' (-1.9469)-0.1505 (-2.0324)-0.2009 (-5.2316)-0.3739 (-4.2124).-0.1310 (-1.9042)-0.1517 (-1.9927)-0.2021 S3 040070 0.6564 » 0.096. -0.0566 -0.0109 -0.0675 -0.0976 -0.0608 (-0.0740) (-0.57/8), (-1.0439) (-0.5563) - (-0.1110) (-0.6119) 4-1.0286) (-0.5812) LGLERA /D . ' ' (-1.2858)-0.1654 (1.0282)0.2805 .: (-1.3136)-0,1735 (0.9839)0.2055 R2CONSTANT " _'.0.9550'(-2.3857)-1.9683 (-2.5810\-2.3662 0.9586 (-2.5694)-2:3727 0.8879 (-2.0344)-4.9272 0.8898 (-0.7407)-3.4026 0.9552 (-1.0587)-5.6672 0.9596 (-0.31)03)-1.7188 0.8880 (-0.0166)-0.0856 0.8907 ND-W 28» 1.4154 27 1.0000 28 .7232 . 27 1..9711 . 28 1.4384 27 1.0339 . 28 1.7151' 27 1.9734 Variable APPENDIX TABLE 4.3 . REGRESSI0N,ANAIN91S: 'ENLISTMENT SUPPLY, UNITED STATES, quarterly, 1966(3)-1974(1) Equation 1 Equation 2 Equation 3 ' Coefficient,Equation 4 (t-statistic) Equation 5 - Equation 6 Equation 7 Equation 8 ' URDepehdent Variable -0.0035 ERA -0.0074 ERA ERD .0185 ERD ERA ERA ERD ERD WC ' (-1.0567) , (-344646) (-1.6278)-0.0106 0.0002 0:0002 -0.0004 0.0006 URWH 0.0216 0.0246 / -0.0821 -0.0942 - 0.0149(0.4115)(0.7267). -- 41.0241).$3.0133(0.6859) 0.0000_ (-0.4552)-0.0820(2.1112)0.0001 -0.0743(0.4679)(0.8305)0.00002 -(1ARA/D (-1.2131)(3.2541)0.0136 (3.0974)(1.9266)0.0154 . 7 J (24.5433)(-1.4537) 0..1434 (-2.5460)(4.7662)D.0961 (-0.7621)(3.3386)0.0132 (3.0121)(0.8142) (-1.6966) 0.1432 (-1.9562) 0.0884 POIRA/D .0.5246(5.0150)0.0039 (4.6199)0.00470.5844 % (0.9642)0.01950.3614 ,(.1:41.53) 0.02070.5443_ (4.9076)0.00460.5205 (4.4322)0.00540.5496 (24.6605)(1.0984)0.01550.4151 (1.4908')(4.2332)0.02770.5708 (0.8770) (1.5063) 1 (1.5939) e(1.7909) (1.0289) (2.74)9? S2Si' (2.7574)0.00190.0012 (5.0794)0.0025.0.0036 (0.7857)( 0.0012 (0.6647r0.0009 , (1.7415)0.0010 (2.9333)(1.1127)0.0025 (0.8919)(1.1029)0.0017 (0.1772)0.0003, S3 (4.2019) (4.1827) (1.2258) 0.0020 (1.8443)0.0028 . (4.0548)0.0019 (3.8507)0.0023 (1.3591) 0.0023 (1.8536) 0.0028, LCERA/D stow (6.3149)0.0027 (4.1763)0.57000.0024 (341112)0.0045 t -0.1128 (6.1249)0.0029 (4.9659)0.34610.0027 (2.5876) 0.0042 (3.9334)-0.1097 0.0063 CONSTANT,' s( (2.1612)0.0084 ' (-0.7783).0:0023(4.1635) (1.7121)0.0154 (-2.3982)(2.8417)0.0207 (-0.6236)-0.0197 - (-0.9016)-0.0266(2.2544) (0.3078)0.0281 (r0,7899)(-2.8996)-0.0.609 0 . .N D-WR k - . 1.74730.8982 29, 1.89460.8951 "*30', 09815 1.7374 40.8923 1.2105 1.74570.9017 - 2.00170.8965 1.72220.9823 1.40.9000 2366 or, 30 29' "" ,e30.* *29 let. 36 y9 1 1 ;A284. 10 4 APPENDIX TABLE 4.4. REGRESSION ANALYStg: ENLISEMENT SUPPLY, CANADA, annual, 1969-1973. Va r iable ik Coefficient rt-statistic) , . Equation 1 :Equation.2 Ddpendent LERD LERD "Variable 4 LWR -0.9889 (-0.3070., LWC -3.6004 (-0.8427) LWM 1.3739 (0.3054) LUR -0.2872 -0.0048 (- 0.7763) (-0.0124) ."-l'AVARkaeAj LQARD ' 0.961,3 1,0878 ,(5.7597) (6,2598)- SM 0.8516 0.3456 11.1950) (0,.3663) SQ 0.3654 0.2009 (1.2901) 60.55Z9) SC -0.0949 0.0817 (-0.5991) (0.4218) 1 CONSTANT -6,2480 -0.8624 . (-1.7868) (-0.1946) 2 R 0.9750 0:,9847. D-W 2.7276 2.2302 4 N 19 19 APPENDIX TABLE 4.5. REGRESSION ANALYSISI ENLISTMENT SUPPLY, AUSTRALIA, QUARTERLY BY STATE, 1966(3) - 1973(3) Variable Coefficient (t-statistic) Equation 1' Equation 2 A. Dependent -LERA LERA Variable . LWR -1.4776 -4-5.5842) LWC t-1.1868 (-4.6009) F LWM f 2.4410 (7,4437) LUR 0.1607, 0:1788 (1.0208) (1.6280) LORA- . 0.8598 0.8991 ., (10.0650) (11.0830) LIRA -0.0049 0.0371 (-0.4639) (2.7166) . .. S1 0.0175 .0.0088 (0.3516) (0.1872) S2 -0.0095 -0.0137 (-0.1844) (-0.2814) S3 . 0.0045 0.0005 (0.0877) (-0.0112) 'SN, -6.0057 -5:3808 $. (-23.4720) (-19.3470) SV -6.0585 -5.4687 (-25.2890) (-20.9580) SQ -5.9747 -5.3565 (-26.3130) (-21;0840) , :--5.2408 , SS -. -5.8503 c (727.0400) (--;44320) . .,-. SW -5.8891 -5.3231 i ,(-25.4680) (-21.1670) ., ... ST --6'.0436 - 5.4368 (-23.1110 (-29.4910) rfi / et _ r '^ R 0.5583 . 0:6086 244 N. 174 174 -A30- r ..1 DATX APPENDIX: C TER 5. ,- , Education and Marriage Effects of the Draft. Pats` Sources and Notes S 01. AUTRALI-4. ., N. Marriage: ahrival, 1962-1973. The' mar-aage .rate was grooms under 21 years of age as a proportion QS the population of 'males aged 17-20. Both series were from Commonwealth Bureau of Census and Statistics, Demography, annual. The indubtion rate,waF annual indgctions into the military as a proportion of twenty year'old males, the draft-age group.,Induction , data were provided by the Directorate of Manning, Army Headquarters, Canberra, (September1972 and November. 1974), anc,L,,the population base, was from DeMography. The populatioft figures were at June. The Vietnam pummy Variable was set7at lAor 1966-1971, the years of Australian conscript troop presence in Vietnam. 2. Education: quarterly, 1964(1) t-1974(1).. 4.. r The education participaOn rate was given by total school enrollments, all males, as a proportion ofall, males not in the labor force. This was available as a proportionand given in Commonwealth Bureau of Census and Statistics, The Labour Force; qUarterly. age-, specific education statistics are published for tertiary -education in Australia, and the annual tertiary. enroll - pent figures given:in Commonwealth Bureau of Census and Statistics, University Statistics, 'were not accessible in the United States.) °- UNITED STATES . . 1,. Marriage: quarterly, 1962(1) 1966(4). The marriage rat Was number of bridegrooms aged 18-24 per 1000 of theotal male population 18-24,as provided by National-Cent r forc'Health Statistics, Vital Statistics. of the United"States, annual. Only states meeting federAl statistical requirements were included in the marriage series, and the proportion of national population of 18-24 year old males so covered ranged from 6percent in 1962(1) to 76 percent j.n 1966(1). ,The number of marriages was extrapolated in proportion to the population of the states involved to derive,a,'- totalP:S.--figure.,, 4 -.. .. , if :,The in*Ctibn rate used' theYSame population' base as 'thesmaBriage. rate, and indUctions were obtained from Department of Defense, Selected _Manpower Statistics, 1974..%The Marriage Dummy Variable was set at one for . I.% . the period 1963(3 to 1965(3). . . ri . . ', Education: annual, 1946-1973. 7 . The education participation rate is first time enr247. ment's in collegeL males aged 18-24 as a proportioeOf. the total population-0'males aged 18-24. The enroll-' ment statisticaZare.#6i Departmentof Health, Educa- tion and Welfare, Digest of Educational Statistics,103, and the population base is from Vital'Statiatics ofthe. United States, annual. .. O Thelnduction ancPbaSualty figures are from Department of Defense, .Selected Manpower Statistics,. 1974, sirith' inductions related to. the Population base of-18-,24 year old males and casualties related ta total army force strength, the latter-also.from Selected Manpower/ Statistics. Casualties refer Only to battle deaths. -. The Student Deferment Dummy Variable is set at one from 1952, when deferments were first initiated,, through to 1973 when the draft ended. I 0 0 0 4 eof 'NOTES 9. C- ob NOW S. 'Chapter 1. r. Introduction: Institutional 'andiHistorical Background . ' 1. Seymou Neiman, "The Peaceful W6r1d-of Eccnomicsr," 4' 4S Journal of Economic Issues, Match 1972, pp.- 35-41. See Peter B. Doeringer and Micheal 6. Piore, Internal tabor Markets and Manpower Analysis, Lexington, Mass.,: . , . D. C. Heath, 1971. -3. 'Roy Forward, Military Manpower-Procuremerit in 142 Countries, unpublished manuscript", University of , Queensland, Brisbane, Austrifia, 1970. - 4, 'l'or reviews of the military compensation system see: Harry J. Gilman, "Military Manpower,Utilisation," in S. Enke (ed.) Defense Management, Englewood Cliffq, Prentice #all, 1967, pp3 246-266, and Stephen L. Canpy, Military.ManPower Procureme4: A Polity Analysis, . Lexington, Mass: D. C. Heath, 1972, Chapter 5. Major. ,officialreports on military pay structure have be s: Department of pefense, (U.S.), Modernizing Military Pay, (HdbbellReport), Washington, November 1967; National Board for Prices and Incomes, (U.K.), Standifig- Reference on the-Pay of the Armed Forces, Report Nos. 70 and 116, Lcindon, 1968, 1969; Department of Defencd,, (Aus- 'tralia), Final Report of the ,Committee of Inquiry into Financial Terms and Conditions of Service for Male and Female Members of the Regular Armed Forces, (Kerr-Wood- ward Report),..Canberra, 1972. . " . R. G. Menzies, The Measure of the Years, Melbourne: Cassell, 1970, p. 75. 4 6.' Report of the President's 'Commission on an All-Voluntee? Armed-Force (Gates' eport), Washington, 1970, p. 7. Colin S. Gtay,'Canadian Defence Prioritie8C-A Question" of Relevance? Toronto: ,Clarke, Irviin & co., 1972. 8. Gwynn Hariles7Jenkiris, "From Conscription tOe'V'olunteer:. Armies", Forceiin Modern Societies: The.Miiitary Profession, Adeitihi Papers, No. I13, International% - Institute for Strategic Studies, London, Winter 19731, p: 11., See too J. van Doom, The Decline of tilt Mass. Army y -Sociological-Essays, London: Sage,. 1974: 'or -a review of the growing,fielg of study of nod-Violent.actkon see Gene Sharp, .The Politics of Non- violent Adtion-,' Boston: Porter Sargent, 1973. fi- 4. 4 . 7 r 2f ,egrwy, -.4 -N2- ,,Chaptek 2. .Fiscal Politics and Conscription, A 1. For an argument that the procurement system-may affect the level of defdnse chosen by the collectivity, see Richard E. yWavner, "Conscription; Voluntary Service ansl Democratic .Fiscal Choice," in J.M. Buchanan and R.Q. T011ison (editors), Theory of Public Choice: Political Application of Economic/ Ann Arbot: University of Michigan Press, 1972, pp. 136-153. `2. For a proposal that Congress directly,authorize troop strengths, see Committee of Economic Development, Military Manpower and National Security New York, 1972, "pg.23;-. 30. . :. ,. .. t \ . 3. Kenneth V. Greene and Daniel H. Newlon, "the Pareto Optimality, 'of a Lottery Draft," Quarterly Review of Economics and' Business, - Winter 1973, pp. 61-70. 4. T.K. Galbraith, cited by J.F. Hortonet. al., How to End the Draft, Washington: The National Press, 1967, p. 42. b 5. 'Robert D. Tollison, "The Political Economy of .the Military. Draft," Public Choice, Fall 1970: Reprinted in J.M. Buchanan and R.D. Tollison (editors), Theory of Public Choice: Political Applications of Economics, Ann Arbor: University of Michigan Press, 1972, pp. 302-314. Citations refer'to the latter. 6. Robert Tollison, pp.-310, 313. . 7. For illustrative discussion of.military'attitudes.toward conscription see for the U.S.: Milton Friedmam, "Volunteer Armed Force: Failure or Victim?" Newswdek, February 11, 1974, p. 82; for Australia: A.J. Forbes, Commonwealth Parliamentary . Debates, House of Representatives, 16 Ndvember 1964, p. 2896; for Great Britain: Royal-United "Services Mobilisation of Youth: Voluntary Service 'or Conscription? London: R.p.s.I., 1970; and fot*Canada, Department of National Defence_,Report of the Minister's Manpower Study (Men), Ottawa: CanadiaRrForces Headquarters, 1966, pp. 55-56. f * . See Tables-2.1 and 2.2 below.. Also, see Chapter 4, Table 4.2 for British poll evidence. 9. For a detailed.analysis see Albert Breton, The Economic Theory of Representative Government, Chicago: Aldine, 1974. 10. A discussion of vote-trading.Possibilities is given in Kenneth, V.' Green and Daniel H. Newlon, "Economic-Factors Affecting the Likelihood of a Switch to a Volunteer Army," Public finance 'QUarerly, October 1973e pp. 388-398. 11. Actually simple majority voting yas'qualified to the'extent that a maja.Eity in 4 of the 6 states 61as alsO:reguired, The refer- enda Vtre'defeated,under both cokints, so 'we can "proceed as if ,unqualified majority voting applies. 944 N3- 12. For an example which establishes theN.aw of demand" from random behavidt rather than the usual utility maximisation approach see Gary S. Becker, "Irrational'Behavior'and Economic TheOry," Journal of Rolitical%Economy,-February 1962, pp. 1-13. 13. The definitive study is L.C. Jauncey, The Story of Conscription , in Australia, Sydney: Macmillan, 1958 (1935). Alsosee J.M. Main, Conscription: The Australian- Debate, 1901-1970:0 Melbournqo Cassell, 1970, and K.S. Inglis, "COnscription in' Peace and' War, 1911-1945" in R. Forward '& R. Reece, 4e0.), ConscriptioA in Australia, Brisbane: University of Queensland Press, 1968, pp. 22,65. Main and Inglis provide surveys including bibliographies. 14. Glenn A. Withers, Conscription: Necessity and Justice, Sydney: Angus & Robertson, 1972; p.8. 15. Robert Tollison, pp. 312-313. 7 H 4. et e ' , Chapter G. Manpower Requirements Under Alternative Procurement Systems 1. For an elaboration of such a programming approaph,though directed specifically at problems for large bureaucratic companies, see C.J. Purkiss, "Approaches to Recruitment, Training and Redeploy-, ment 'Planning in an InAustry,"- In N.A.B. Wilson4.10d.Y, Manpower Research, London; English Universities Press, 1969, pp. 67-81; and C.J. Purkisph "Models for Examining and Optimizing Manpower Deployment," in-A.R. Smith, (ed.) 'Models of Manpower . Systems, New York: American Elsevier, 1971,,pp. 265-284. 2. Robert Dorfman, "Econometric Analysis for Assessing the Efficacy of a Public Investment." Proceedings of the Study Week (October 1963), Le Role de ltRnalyse Econometrique danscla Torffiulatioh'de Plans de Teveloppembnt, Pontifical Academy of 4 Sciences, Vatican City, 1965, pp. 187-205. 3. Theo Sommer, "Committee Discussions on the Future of Military Fotce in Modern Societies: Report to the Conference," in Force in Modern' Societies: The Military Profession, International Institute for Strategic S udies, London, Adelphi,Paper No. 133, Winter 1973,, p. 33. Also e M. Olsen & R. Zeckhauser, "Collective Goods, Comparative Advantag s and Alliance Efficiency," in R.N. MCKean (ed.), Issues in Defense 'Economics, (New York: NBER, 1967),.pp. 26-48. 4: Peter Samuel, Meeting the Strategic Situation - Economic Considerations, paper, delivered to the Defend Australia Committee Defence-SymposiumflMelbourne, March 1969. 5.. ArthurSmithies/PPBStSuboptimizatron and Decentralization, MeMorandumRM-61787PR, The 'Rand Corporation, April 1970. 6. This paragraph boriowS from Smithies, pp. 5-10: t 7. For a ran of papers on all of .these areas of pofefitial substitu ion see: W.N. Jessop (ed.) Manpower Planning: Operational Researc and Personnel Research, Proceedings of a NATO Confetence (Augus ,1965)., (New York: American Elsevier, 1966); N.A.B. Wilgen; and Studies Prepared for The RreSident's Commission on an All-Volunteer Armed Force, Washington, November 1970, 2 volumes. A more recent Brookings Institution report summarizpg the latest rn-ervice studies on substitutionkis M. Binkin,&.J.D. Johnson, All Volunteer Armed Forces: Progress, Problems and iprospects,.Report for the Committee on Armed Sekvicep, U.S. 'Senate, 93d Congress, 1st Session, June 1, 1973, (Committee Print), pp. 46-56. Some corresponding Australian analysis is -given in Wifhers pp. -53-60, but little.information is available due to the official secrecy on these matters as discussed in J. Spigelmin, Secrecy (Sydney: Angus & Robertson, 1972), pg.,120-123. 8. See D.J. Bartholomew, "Renewal Theory Models for Mahpower'Sy.ggems," in-N.A.B: Wilson, pp. 120-128, I -1157 0 - 9. W. Lee Hansen and Burton 1.. Weisbrod, "Economics of the Military Draft,"'Quarterly Journal of Economicsw August 1967, p; 405. 10. Steven L. Canby and Benjamin P. Klotz, The Budget Cost of a Volunteer Military, RM-6184-PR, The Rand Corporation, August 1970,p. 6; unpublished data, Directorate of Manning, Army Headquarters, Canberra. 11. Gary R. NelSon, "Economic AnalysisOf First-Term Re-enlistments in the Army," Studies Prepared forthe President's Commission -...., pp. II- -1 to 11-6.,31. asp -I . ,F4.pnklin M. Fl4her,::A4pectogitcost-Bepeifit Analzsi§ plDe,fenc.9, .4 4,1 Manpower Planning," in N.A.B. Wilson, p. 98. _Also see W.H. Somermeyer and L. Hordijk,, Intertemporal Optimization of Allocation of Governwent Expenditure to Defense and other purposes, Netherlands School of Economics, Rotterdam, Report No. 7204, August 1973. 13. Paul A. Weinstein, "Military Manpower Procurement: Comment," American Economic Review, May 1969, p. 67.. - IC 'Stewart W. Kemp, "British ExperienCe with an Al1=Volunteer Armed Force," in Studies Prepared for the President's Commission ..., Volume II, pp. 11-4-35 to II-4-41. 15. Report of the President's Commission on an All-Volunteer Armed Force, Washington, 1970, p.' 172. ' 16. John A. Sullivan, "Qualitative ReqUirements of the Armed Forces," in Studies Prepared for the President's Commission...., Volume 1, p. 1-2-47. . . 17. 'Alvin A. Cook, Jr., "Supply of Air Force Volunteers,".in Studies Prepared for the President's Commission...., Volume I, pp. 11-4-1 to 11-4-34. 18. Stephen L. Canby, Military Manpower Procurement:A Policy . Analysis, Lexington, Mass.: Lexington Books, 1972, p. 36. 19. David M. Reaume and Walter Y. 0i, "E4ucational Attainment of Military and Cibilian Labor Fordes," in Studies Prepared for. _ the President's Commission..., pp. 1-3-1 to I-3-23; ci Chapter 4. Military Manpower Supply. . . 1. Stuart Altman, "Earnings, Unemployment and the Supply of Enlist- ed Volunteers," Journal Of Human Resources, Winter 1969,'p.40. A For a similar assumption see also Walter Y. 0i, "The Economic Cost.of the Draftj" American Economic Review, May 1967, pp. 39762; and Anttg:TyC. Fisher, "The Cost.of Ending the Draft: Reply," AmericanEconomic Review, DeceMber l970, pp.97.9-983:1 2. F.C. Mills, Statistidel Methods, Third edition, London: Pitman, 1955, p.155. 3. H.F. Lydell, The Structure of Earnings, London: ,Oxford University . . Lydell sholmthat eaeninge conform} .to a standard- distributional pattern that is, lognormal leptokurtic witha Pareto upper tail. Fo the population of young men much of the ,Kurtosis'and the Paret tail is:removed since these are accounted , for by the influence oexperience and responsibility, respectively. AL. See Anthony C. Fisher, 1-983. 41" 5. MFI SurveysTiy. Ltd., Word 'Association ,Study Prepared .for the Commonwealth Advertising Division, Sydney, November 1968, p. v, (mimeographed). .- 6. Burton C. Gray, "Supply of First-Terta Enlistees: A Cross"- Section Analysis," in Studies Prepared for the President's Commission bn an All-Volunteer Armed Force, Washington, November 1970, Volume I, p. 11-2-2. 7. P. Rao & R.L.Miller, Applied Econometrics, Belmont, Calif: Wadsworth, 1971, pp. 107-111: For a formal proof of simultaneous equations bias producing understatement of supply elasticity see S.L.Canby and B.P.Klotz, The Budget Cost of a Volunteer Military, RM-6184-PR, the Rand Corporation, August 1970, pp. 62-63. - 9. See, for instance, G.W.Ladd, "Regression Analysis of Seasonal Data, "' Journal of the American Statistical Association, "June 1964. ' 10. See J. Johnston, Econometric Methods, Second Edition, New York: McGraWHill, pp..262-263, 303-320.' 11. On the racial question for United.States enlistment see Martin Binkin & John D. Johnston, All-Volunteer Axmed Forces: Progress, Problems, and Prospects, Report prepared for the Committee on Armed Services, United States Senate,93rd Congress 1st Session, June 1, 1973, CommitteePrint, Washington,' pp. 16-20. The recent trend to imRroved black economic position documented by Freeman should, if 4intainea,.limit the more than pro- portional.black representation in an all-volunteer force feared for widely divergent reasons by many parties. See Richartareman, -"Decline of Labor Mirket Discrimination and'Economic Analysis," 'American Economic.Reviewi May 1973, pp. 280 -286.On the Canadian french-speaking problem see Ernie S. Lightman, The Economics of Military Manpower- Supply in Canadat'unpublished doctoral dissertation, University. of California, Berkeley, August, 1972, especially pp. .107-114. 12. See R.L. Chaney, Discounting by Military Personnel byVarious Ages-, unpublished .Department of Defense Study of Mi14.tary COmpensationr October 1962. 13. RAND Survey cited by StevenL. Canby, Military Manpower Procurement; A Policy Analysis, Lexington, Mass.: D..C. Heath, 1972, p. 181. 3 "4'14."The'details"b' this argtaerit'are in Alen Pechter, "impact P and Draft Policy on Army Enlistment Behavior," in/Studies repared for the President's Commission.... Volume I, p. 11-3-8. 15. W.B. Reddaway, "Wage Flexibility and Allocation in the Labpr Market," Lloyd's Bank Review, March 1959, pp. 32-48. 16. J.C. Rause, "Enlistment Rates for Military Service and Unemployment," The Journal of Human Resources, Winter 1973, pp. 98-109. 17. For the 1964 survey results see Harold Wool, "Selected Tables from Surveys of the United States Militiry. Age Population, October-December 1964," in N.A.B. Wilson, (ed.), Manpower Research, London: The English Universities Press, 1969, pp. 242-43.. The 1967 true volun eer estimates are given in Report of t President's Co on on anAll- Volunteer Armed Force, W4ngtoni; February 1970, p. 51. 18.. For detailS oft the working of Selective Service system allocation Of calls see Anthony C. Fisher, The Supply of Enlisted Volunteers for Military Service, Doctoral,Dissertatibn, Columbia UniVersity, 1968, Appendix B, pp. 72 -74, 19. Commonwealth Parliamentary Debates, House of Representatives, (Australia); 23 August 1971, p. 739 and 30 August 1972, p. 985. 20. Ernie Lightman, p. 216. 0 21. Jerome,Johnston and Jerald G. Bachman, Young Men ar Military Service, (Youth in Transition Series, Volume,V) Michigan: Institute for Social Research, 1972,p .101- 30. / 22. Report of the President's Commissionon an All-Volunteer ' Force, Washington: 1970, p.172. 23. Robert E. Hall,,"Why is the Unemployment Rateso High at Full Errip.loyment?'14. Brookings Papers.,t4P,3 , 1970 ?p.369-4.2,2. Maktin S: Feldstein, "The Economics of the New Unemployment" The Public.Intetest,I1I: c 24. A.A.Cook, Jr. "Supply of Air FOrce Volunteers", and Alan . Fechter, "Impact:of Pay and Draft Policy on Army Enlistment Behavior" in Studies Prepared for the President's Commission... pp. 11-3-1 to 11-4-34. 25. Ibid. Also Anthony C. Fisher, "The Cost of the Draft and the Cast of Ending the Draft," American Economic Review; June 1969, ,pp. 23172541. 0 -119- Chapter 5. -,,.. Evaluation of Alternative Procurement Systems' , . 1. The Austtglian estimate is given in GI ein'A. .Withers,' Conscpiption: Necessity and JusticeSydney: Ahgus & Robertson, 1972, P. 93. 2. The American estimate is given in Report of the Presi- dent's Commission on an All-Volunteer Armed Force, Washington, 1970, p. 3. The theory of the dual labor market is developed in . Michael J. Piore, "On-the-Job Training in a' Dual Labor Market,." in Arnold R. Weber, et al. (eds.), Public-Private Manpower Policies, Madison, Wisconsin: Industrial Relations Research Association, 1969. 4. Charles Killingsworth, "Recent Developments in Labor Mfirket Theory," Paper delivered at the New Manpower Researchers' Conference, George Washington University, October 4e 1974. 5. This presentation borroWs from E. F.. Renshaw, "The Economics of Conscription," Southern Economic Journal,, October fuo, pp. 111-117. 6. One writer who has drawn attention to this.mongpsony problem is Thomas E. Borcherding, "A Neg/eqtgd Social Cost of a Voluntary Military," American Economic Review, March'1971, pp. 195-6. See also R. L. Bish and P; D. O'Donoghue "A Neglected Issue in. Public Goods Theory: The Monopsony Problem," Journal of Political Economy, November-December 1970, pp. 1367-71; and "Comment" by H. Shibata and "Reply" by Bish and O'Donoghue in Journal of Political Bconothy, January- February. 1973, pp. 22j- . 226. 7, R. N. McKean, "Property Rights Within Government and Devices to Increase Govetnmental Efficiencyt" Southern Economic Journal, October 1972, p: 184. 8. W. Lee Handen and Burton Weisbrod, "Eanomics Of -the ,Military Draft," Quarterly Journal of Economics; August 1967, p. 403; J. Ronnie Davis and Neil A. Polomba, "On the Shifting of the Military Draft as a Progressive Tax-in-Kind," Western Economic Journal, March 1168, p. 150. 9. Larry A. Sjaastad and RonaldW. Hansen""The Conscription, Tax: An Empirical Analysis,"Studies Prepared for the President's Commission on anAll-Volunteer Armed Force, .Washington, 1970, pp. IV-1-1to 111-1-64. -140- , .. . , 10. The adjustment was made by first calcblating minimum supply price welfare loss as a proportion of gross tax" subsidy value of conscription, using a'formula derived as for equation (3), i.e., , , MSWP 1/2 /-2L2 -,k W -w)L 2, 1 2 44. 'where Lwas the number of true volunteers and I the 1 '2 required total force strength.MSPW is the welfare loss to be,balcufated,.and (w2-wi)L2 isthe gross subsidy;tfound Ohere cal is the prevailing military wage and w is the increa's necessary to provideJ02, assuming; 2 a constant wage ela ticity of.supply. The estimates of the relevant Variables are those given in Sjaasted: and Hansen, updated to 1970 prices, 11. For a formal proof of this see Kenneth V. Greene and - Daniel E. Newton; "The)Pareto. Optimality of Eliminating a Lottery Draft," Quarterly Review of Economics end Business -, Winter 1973., pp. 61-65. 12. Based on a random sample of 200'male students at La-- Trobe University, Australia, conducted by-this-writer.. in June 19.70. 1 13. Stephen L. Canby, Mil Manpower procurement: Policy Analysis, LexingtonMass.: D. C. Heath, 1972, p. 92. . 14. Quoted in,H. A. Marmon, The Case Against: a Volunteer Army, Chicago: Quadrant Books, 1971, p. 21. 15. Federal marriage, statistics are given only fOr states. meeting federal statistical requirements. These states represented 75 percent of total population as of 1966 aid the marriage statistics have been extended pro rata for a total U.S. estimate ofabsolutg-number of marriages. See Data Appendix. - 16. Gary S. Becker, "A Theory of Marriage: Part rine Journal of Political Economy, July/August 1973, pp. 813-846. "A Theory of Marriage: Part II", TheJournal of Political Economy,March/April1934, Supplemeht,pp. 1911-S26. 17. Sjaasted-'& Hansen, IV-1-29 to IV-1-32. re . 18. Paul A. Weinstein, 'Occupational Crossover and UniverSaI Military Training," in Sol Tax (ed.), The Draft: ,A.Handbook of Facts and Alternatives, . Chicago: University of: Chicago. Press, 1967, p. 24. 19. For a survey of much of the available evidence see aavid B. Kassing,- "Military Experience,as.a Determinani - of Veterans,' Earnings," in Studies Prepared for the President's Commission on an All-Volunteer Armed Force, Washington, 1970, Volume II, pp.JII-8-1 to, III-8-22., . , '20. Desmond P. Wilson and Jessie Horaok, "Military Exper- ience as a Determinant of Veterans' Attitudes,." Studies Prepared for the President's Commission on an Ali-Volunteer"Armed Force, Washington, 1970, Volume II,.. 'pp, 111-7-1 to 111-7-27. . . 21. R.'Parrish and M. Weisser, "Paying the S'Oldier His Hire. The E6Onotics of Abolishing-ConicriOtion,", Current Affairs Bulletin; .(Sydnex), July 27, 1970, pp. 72-3. -. 22. Sjaaited and. Hansen, pp. -23. Sjaasted and Hansen; and Report of the'"President's - Commission . . . pp.IV-1-3 :24..The more 'recent estimates by Knapp employ' only the , financial burden. congeption of the tax, and use the military wage as of September 1971 to estimate that burden The SepteMber 1971- wage however reflected -' the major. military pay. increases which were 'part of the -Movement to'alloluilteer fordes. It is inappropriate N . to use such a markgt-ori4nted wage for anything other than a transitional bupden for draftees, let alone in. himan capital sttady state analy-sis as Knapp'implies. X. H. Knapp! "A Human Capital Approach to the Burden of Military- Draft," Journal of Human-Resources, pp. 485-496. .N 25. These: calculations are made for the representative year 1970 and represent the calculated total implicit taxes- diVided- by the. associated _number of seriiibemen. These figures are giVen in, the text above& ..egvlar.. ( .expi!itit) income tdx obligations aYe evaluated at . the 197b prevailing rifes as given in the Commonwealth tear Book 1970.Adjustfigt is made, for thetax advantage of in-kind military-income. . 26..1'Report of. the President's Commission. . . p. 26. . -1112- s t - 27. MarkV. Pauly and. Thomas D. Willett, On the Distinction Between 'Ex.Post' and 'Ex, Ante" Ectuity, Harvard Institute of Economic Research:D4scussion Paper No. 153, December 1970,. p. . See alsoqihomas.D. Willett, f .: / . "Another Cobt'of Conscription," Western Edonomic ,5 ,....7151mmiDecember 1968, pp-. 425-426. . ..r 28. Richard M. Nixon, "The All-Volunteer AimedFOrce," Radio Address; 17 October 1968; reproduced in Marmion, p. 77. 29. Greene and Newlon, pp. -67-68. 30. See Davis and Palomba, pp. 150=-153, for analysis of the draft as a progressive tax-in-kind, through this shifting or avoidance effect. 31. Eli Ginzberg, "The Case for a Lottery" The Public CZ, Interest, Fall 1966, pp. 83-39. 32. See the discussion of quality 9f personnel under alternative procurement systemb, in Chapter 2. 33. Theyear of highest casualties during;the VietnamWar . forAustralia was 1968. In that year the death rate forAustralianservicemen under 25 Was=0.0019, from, allcaubes. The death rate for civilians.of the same agewas 0.0021. Source: Commonwealth Bureau of Census andStatistics, Demography, 1568. For U.S. details seeStephen L.. Canby, pp. 63-72. ti 34. For an applicatiot employing Rawls'-,principls of justice bee Glenn Withers, pp. 102-152. - 35. Commonwealth Parliamentary Debaes.,-,(House 6 Representa-4 tives), 11 April',1972, p. 1440. , 36, A.D. McGuarr, Conscriptiron,and Australian Military Capa- bility, Canberra Papers on Strategy and Defense, No. lle Canberra: A.N.U. Press, 1971, p. 22. , . . . . , , 'Review 'of the Administration and Operation of the Selective Service System,7 Heog.441gs before'the,Committee on Armed Services, House of'Apresentatives, 89th U.S-,. Congress, _ . i 2nd Session, June 22-30, 1966, p.i.,054A. , 38. Mi ton.Friedman, "Volunteer Arm_:: 'Failure or Vi tim?," Newsweek, FebruoxY 11 p. 8 2 . . 1) 4 %. a. -1113- a 3 . D.P.' 14ilson nd Horack, "Military Recruitment'and Militarism iLatin America, in Studies prepared for thetPresident Commission...., Volume II,, pp. 111-5-1 40. Pieface to Thomas Reeves and Karl Hess, The End of the Draft, 'New Yo lc:- Vintage Books, 191Q, p. 'xvi. O Ci ?An