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.