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Military Spending and Employment

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  • Cheng-Te Lee

Abstract

This paper constructs a theoretical model involving supply-side effect, demand-side effect, and security effect produced by military spending to explore the effects of military spending and foreign military threat on employment. This paper proves that the relationship between defense burden and employment is nonlinear (i.e., reverse U shape.). Hence, we find the defense burden of maximizing employment. In addition, we argue that a rise in foreign military threat will be detrimental to the level of output and in turn lead to a reduction in employment. Finally, we show that an increase in the variance of the foreign military spending shocks will raise the level of output and then lead to an increase in employment.

Suggested Citation

  • Cheng-Te Lee, 2022. "Military Spending and Employment," Defence and Peace Economics, Taylor & Francis Journals, vol. 33(4), pages 501-510, May.
    • Handle: RePEc:taf:defpea:v:33:y:2022:i:4:p:501-510
    DOI: 10.1080/10242694.2021.1873660
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    References listed on IDEAS

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