High Unemployment and the Armed Forces: The Costs and Benefits of Recruiting Military Personnel in Norway

ABSTRACT

The SARS-CoV-2 pandemic, the subsequent non-pharmaceutical interventions by governments to reduce the transmission of the coronavirus, and adjusted consumer behaviors have resulted in high unemployment rates worldwide. In this paper, we explore whether the Norwegian Armed Forces can exploit this period of high unemployment to strengthen security and defense in Norway while increasing the job opportunities for young individuals in a difficult labor market. Before the pandemic, the Norwegian government had planned to gradually increase the number of personnel in the armed forces. Hence, an expedited recruitment strategy may improve welfare. We calculate the costs and benefits to Norwegian society of a strategy that exploits the hike in unemployment rates to recruit new personnel to the armed forces at a faster rate. We find that the expedited recruitment strategy will likely provide net benefits to society if the unemployed have a fair chance of being employed. However, we stress that there must be a real need for higher defense spending, it is difficult to estimate the economic value of defense production, and there may be a trade-off between the goals of labor market policies and those of defense policies.

KEYWORDS:

• Norway
• recruitment
• armed forces personnel
• unemployment
• covid-19

Acknowledgments

We would like to thank Torbjørn Hanson, Kari R. Strand, Sverre Kvalvik and Steinar Gulichsen for generous amounts of support, comments, and critical perspectives to the paper. The useful comments and constructive suggestions by an anonymous referee are also gratefully acknowledged. The usual disclaimer applies.

Disclosure Statement

The Norwegian Ministry of Defense funds our research program, and is (obviously) eager to understand the economic effects of an expedited recruitment strategy. MOD commented on the reports that this paper builds upon. The comments concerned understanding the underlying assumptions and details of the defense sector in Norway. To be clear, once assigned the task of investigating the effects, we have designed and executed the research independent of the MOD. We, therefore, emphasize that the results presented in this paper stem from unbiased and academically independent research.

Notes

1. https://www.nato.int/cps/en/natohq/official_texts_112964.htm

2. Source: Defense budgets from the MOD (Forsvarsdepartementet 2012, 2020b), gross national product (GDP) numbers from Statistics Norway, including estimates for the GDP in 2021 (SSB 2021).

3. For interested readers, the advice from the Chief of Defence contains information on the number of units of weapon systems, number of personnel, and strengths and weaknesses with each build-up approach. An abridged English version is available here: https://www.forsvaret.no/aktuelt-og-presse/publikasjoner/fagmilitaert-rad/FMR%202019%20english.pdf/_/attachment/inline/f85fc95d-3364-406a-9d02-6373fb325414:a477b4d241c42381174de9924caae62d9c02c248/FMR%202019%20english.pdf

4. For the literature on threats, see e.g. Brummer (2020), Oren and Brummer (2020) and Lindgren (2019).

5. Thanks to the anonymous referee for making this point.

6. The plan also involves a substantial increase in the number of conscripts, but the economic value of this increase is not included in the scope of the analysis presented here. Compulsory military service is a related yet very different economic topic.

7. See Lindgren and Presterud (2021a, 2021b) or Hanson and Lindgren (2020) for further discussion.

8. Bartik (2012) refers to these as part of a different tradition than the reservation wage scholars.

9. Thanks to the anonymous referee for making this point.

Additional information

Funding

The paper is written within the research program ‘Personellstudier’ (Personnel Studies) at the Norwegian Defence Research Establishment (FFI), and is fully financed by the Norwegian Ministry of Defense (Forsvarsdepartementet).