New Economics of Manpower in the Post-Cold War Era

Since the publication of Volume 1 of the Handbook of Defense Economics, key events have shaped the defense manpower research agenda and called for research to help policymakers deal with the challenges that these factors presented. One event was the end of the Cold War, which permitted drastic force reductions in the USA and elsewhere and enabled many NATO members to eliminate conscription. A second event was a rise in college attendance in the USA, which led to recruiting difficulties despite the reduction in accession demand. A third event was increased operational tempo of US forces abroad. Fourth is the rising cost of US military entitlements and a shift toward a greater share of military compensation being deferred. This chapter reviews the recent work that economists have supplied in response to these events. Studies have analyzed the dramatic trend toward volunteer forces in Europe, seeking to explain why some countries chose to end conscription while others did not. Studies of US enlistment supply have estimated the effect of rising college attendance on enlistment and evaluated strategies for mitigating its effect. Studies of operational tempo have provided new theoretical insights about the relationship between operational tempo and retention and empirical evidence about this linkage. Improvements have been made to models relating compensation to retention, and the models been used to address issues relating to the structure of compensation. This chapter reviews these studies and other new contributions to the defense manpower literature. Reserve force issues remain a neglected research area. Despite the heavy reliance on reserve forces in recent US operations abroad, little is known about how changes in activation expectations and activation duration affect reserve recruiting and retention. Such analysis is needed to guide reserve compensation and personnel policy, and this topic represents an important area for future research.