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Expanding the Norwegian Armed Forces in the Time of Corona: Benefit-Cost Analysis in the Context of High Unemployment Rate

Lindgren, Petter Y. and Presterud, Ane Ofstad (2021): Expanding the Norwegian Armed Forces in the Time of Corona: Benefit-Cost Analysis in the Context of High Unemployment Rate.

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Abstract

Could the Armed Forces in advanced economies exploit the high unemployment during the corona pandemic to provide jobs to unemployed and strengthen nations’ security and defense? Unemployment is expensive for individuals and societies. If a public sector is supposed to expand in size in the future, one mitigation policy against high unemployment is to accelerate the recruitment plan. In Norway, policymakers plan for a gradual expansion of the Armed Forces towards 2024. In this article, we calculate the costs and benefits to the Norwegian society from a personnel strategy that exploits the dramatic hike in unemployment rates to recruit new personnel immediately. We identify potential benefits and costs through a literature review of the scholarship on the costs of job displacement. Then, we build a benefit-cost model that calculate the net gains to society under several Norwegian economic futures. The results show that an immediate increase in personnel recruitment makes economic and societal sense if the macroeconomic conditions in Norway remain severe over half a year after program initiation and as long as the Norwegian Armed Forces target skills that are prevalent among unemployed.

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