Empirical Essays on Military Service
and the Labour Market
Peter Bäckström
Department of Economics
Umeå School of Business, Economics and Statistics
Umeå 2023
This work is protected by the Swedish Copyright Legislation (Act 1960:729)
Doctoral thesis
ISBN (print): 978-91-8070-079-5
ISBN (digital): 978-91-8070-080-1
ISSN: 0348-1018
Umeå Economic Studies No. 1012
Cover by Gabriella Dekombis, Inhousebyrån, Umeå University
Electronic version available at: http://umu.diva-portal.org/
Printed by: CityPrint i Norr AB
Umeå, Sweden 2023
Han sett så mången blodig dag,
Så många faror delat,
Ej segrar blott, men nederlag,
Vars sår ej tid har helat;
Så mycket, som ren världen glömt,
Låg i hans trogna minne gömt.
Ur Fänrik Ståls sägner av J.L. Runeberg
Abstract
This thesis consists of an introductory part and four self-contained papers that study
empirical questions related to military service and the labour market.
Paper [I] studies the relationship between civilian labour market conditions and the
number of people who volunteer for military service in Sweden. I use panel data on
Swedish counties for the years 2011 through 2015 and study the effect of civilian unemployment on the rate of applications from individuals aged 18 to 25 to initiate basic
military training. The results indicate a positive and statistically significant relationship
between the unemployment rate and the application rate, and suggest that the civilian
labour market environment can give rise to non-trivial fluctuations in the supply of volunteers to the Swedish military.
Paper [II] studies how local labour market conditions influence the quality composition of those who volunteer for military service in Sweden. I estimate a fixed-effects
regression model on a panel data set containing cognitive ability test scores for those
who applied for military basic training across Swedish municipalities during the period
2010 to 2016. The main finding is that if civilian employment rates at the local level go up,
the average test score of those who volunteer for military service goes down. The results
suggest that, due to the way in which different types of individuals select themselves into
the military, the negative impact of a strong civilian economy on recruitment volumes is
reinforced by a deterioration in recruit quality.
Paper [III] studies the effect of peacekeeping on post-deployment earnings for military veterans. Using Swedish administrative data, we follow a sample of more than 11,000
veterans who were deployed for the first time during the period 1993-2010 for up to nine
years after returning home. To deal with selection bias, we use difference-in-differences
propensity score matching based on a rich set of covariates, including measures of individual ability, health and pre-deployment labour market attachment. We find that,
overall, veterans’ post-deployment earnings are largely unaffected by their service. Even
though Swedish veterans in the studied period tend to outperform their birth-cohort
peers who did not serve, we show that this advantage in earnings disappears once we
adjust for non-random selection into service.
Paper [IV] studies the relationship between military deployment to Bosnia in the
1990s and adverse outcomes on the labour market. The analysis is based on longitudinal administrative data for a sample of 2275 young Swedish veterans who served as
peacekeepers in Bosnia at some point during the years 1993–1999. I follow these veterans
for up to 20 years after deployment. Using propensity score matching based on a rich
set of covariates, I estimate the effects of deployment on three broad measures of labour
market marginalisation: long-term unemployment, work disability, and social-welfare assistance. I find no indication of long-term labour market marginalisation of the veterans.
Even though the veterans experienced an increase in the risk of unemployment in the
years immediately following return from service, in the long run their attachment to the
labour market is not affected negatively by their service.
Keywords: Military recruitment, military labour market, military veterans, peacekeeping,
earnings, labour market marginalisation
i
Sammanfattning
Denna avhandling består av en inledande del och fyra självständiga kapitel som undersöker empiriska frågeställningar kopplade till militärtjänstgöring och arbetsmarknaden.
Från det att värnplikten lades vilande år 2010, och fram till att den återinfördes år
2018, baserades Försvarsmaktens rekrytering helt och hållet på frivillighet. I det första kapitlet av min avhandling undersöker jag hur regionala arbetsmarknadsförhållanden
påverkar antalet unga personer som frivilligt söker sig till Försvarsmakten. Genom att
använda paneldata över svenska län för åren 2011-2015, analyserar jag effekten av regional arbetslöshet på antalet ansökningar om att påbörja grundläggande militär utbildning.
Resultaten visar att det finns ett positivt samband mellan arbetslöshet och ansökningstryck. Slutsatsen är att konjunkturläget kan ha en förhållandevis stor inverkan på unga
personers benägenhet att frivilligt söka sig till Försvarsmakten.
I avhandlingens andra kapitel fortsätter jag att undersöka hur läget på arbetsmarknaden påverkar Försvarsmaktens frivilliga rekrytering. Genom att använda paneldata
över svenska kommuner för perioden 2010-2016, analyserar jag hur förändringar i sysselsättningsgraden påverkar sammansättningen av personer som frivilligt söker sig till
Försvarsmakten. Resultaten visar att en det finns ett negativt samband mellan sysselsättningsgraden och de sökandes genomsnittliga prestationer på försvarets begåvningstest.
Det beror på att personer med relativt höga testvärden tenderar att välja bort Försvarsmakten när arbetsmarknadsläget i deras hemkommuner förbättras, medan ansökningarna från personer med relativt låga testvärden förblir mer eller mindre opåverkade.
Slutsatsen är att den negativa effekt som en stark ekonomi har på rekryteringsvolymen
går hand i hand med en försämring av kvaliteten på rekryteringsunderlaget.
Många svenska män och kvinnor har tjänstgjort i fredsbevarande insatser runtomkring i världen. Trots detta, vet vi väldigt lite om utlandsveteranernas situation på arbetsmarknaden. I det tredje kapitlet av min avhandling (samförfattat med Niklas Hanes)
undersöker vi om militär utlandstjänstgöring påverkar veteranernas inkomster på längre
sikt. Vi använder registerdata från flera olika källor och följer mer än 11 000 svenska
utlandsveteraner som tjänstgjorde under perioden 1993-2010, i upp till nio år efter hemkomsten. Resultaten visar att veteranernas inkomster, i genomsnitt, inte påverkas av
tjänstgöringen. Svenska veteraner från den studerade perioden tenderar visserligen att
ha högre inkomster än värnpliktiga ur samma årskull, men vi finner att detta beror på att
de redan i utgångsläget var en positivt selekterad grupp.
De svenskar som tjänstgjorde i fredsinsatserna i Bosnien på 1990-talet var stundtals
under mycket stor press. I avhandlingens sista kapitel undersöker jag om dessa veteraner
riskerade att hamna utanför arbetsmarknaden efter tjänstgöringen. Genom att använda
registerdata från flera olika källor följer jag 2 275 veteraner som tjänstgjorde i Bosnien
under perioden 1993-1999, i upp till 20 år efter hemkomsten. Resultaten visar att det,
över tid, inte finns någon ökad risk för långtidsarbetslöshet, nedsatt arbetsförmåga eller
behov av försörjningsstöd för veteranerna i den grupp jag studerar. Veteranerna hade
visserligen en ökad risk för arbetslöshet under de första åren efter hemkomsten, men på
lite längre sikt är de en väletablerad grupp på arbetsmarknaden.
ii
Acknowledgments
Writing this thesis was a joy. Getting paid to read, write, and reflect on stuff that really
interests you is indeed a dream job. Don´t get me wrong — it was no walk in the park.
It took some time, and the road was not straight. I couldn’t have succeeded without
the help of others. I owe gratitude to many persons who, all in their own way, have
contributed to the completion of this thesis.
First of all, I wish to thank my supervisor, professor Gauthier Lanot, and my cosupervisor, lieutenant (ret.) Niklas Hanes, for being my guides in writing this thesis.
Thank you, Gauthier, for your critical feedback and for pushing me to keep improving
my writing and empirical analyses. Without you, my thesis would probably be a mess.
Thank you, Niklas, for helping me to ask the right questions and for your positive and
encouraging way.
The thesis project was made possible thanks to the collaborative efforts of Umeå
School of Business, Economics and Statistics (USBE), the Swedish Defence Research Agency
(FOI), the Industrial Doctoral School at Umeå University (IDS), and the Swedish Armed
Forces Veterans Centre. Lars Persson at USBE and Christian Ifvarsson at FOI deserve
credit for making the first part of the project possible. Anders Clareués and Monica Larsson at the Swedish Armed Forces, and Patrik Rydén at IDS, deserve credit for setting the
stage for the second part of the project.
Thank you to all my colleagues at FOI and at the Swedish Armed Forces Headquarters. Mattias Johansson deserves a special thanks for providing me with the freedom
necessary to combine my academic pursuits with my daily work as a human slide rule
under military command. Anders Clareués — again, thank you for your support and
encouragement! Also, thank you to colonels Åkerblom and Demarkesse for letting me
play around with my numbers.
I spent most of the time writing the first part of this thesis away from the university,
while working at FOI. Luckily, for the second part, I had the pleasure of working full-time
together with other PhD-students and faculty at the Department of Economics. Stina,
Balder, Sef, Samielle, Hanna, Linn, Johan G, Johan H, Gabrielle and Evelina — thank
you for being great friends along the journey! And, thank you to all PhD-students in
my cohort at IDS — meeting you from time to time was something I always looked
forward to! I also owe special thanks to Mattias Vesterberg, Magnus Wikström, Linn
Karlsson, Katharina Jenderny, Olle Westerlund, Evelina Bonnier, Balder Bergström, Anna
Baranowska-Rataj, Johan Holmberg, and Richard Langlais, for reading and commenting
on my papers.
Thank you to my family and to all my friends. I´m grateful for each and every one
of you. My friends for being great friends. My mother and my father for always being
there and for providing their unconditional love and support. My brother and my sisters,
along with their families, for being who they are. Finally, but most of all, I would like to
express my deepest gratitude and love to mina tjejjor: Ida, Ella and Astrid. I dedicate this
work to the three of you (and, also, to my mother Britt, who is probably more excited
about this thesis than she was about my actual birth).
Umeå in June 2023
Peter Bäckström
iii
iv
This thesis consists of an introductory part and four self-contained papers that
study empirical questions related to military service and the labour market:
Paper [I]
Bäckström, P. (2019). Are Economic Upturns Bad for Military Recruitment? A
Study on Swedish Regional Data 2011–2015. Defence and Peace Economics, 30(7),
813-829 (reprinted with permission).
Paper [II]
Bäckström, P. (2022). Self-Selection and Recruit Quality in Sweden’s All Volunteer Force: Do Civilian Opportunities Matter? Defence and Peace Economics, 33(4),
438-453 (reprinted with permission).
Paper [III]
Bäckström, P., & Hanes, N. (2023). The Impact of Peacekeeping on Post-Deployment
Earnings for Swedish Veterans. Umeå Economic Studies, No. 1010.
Paper [IV]
Bäckström, P. (2023). Swedish Veterans After Bosnia: The Relationship Between
Military Deployment and Labour Market Marginalisation. Umeå Economic Studies, No. 1011.
v
vi
1
Introduction
Until the end of the Cold War, the main task of the Swedish Armed Forces was
to deter and ultimately fight off an enemy invasion. This all changed in the
late 1990s and early 2000s. In the absence of any perceived military threat in
Northern Europe, national defence was downplayed, and international military
missions instead emerged as a main priority. Swedish national security was now
to be achieved by promoting peace and security in other parts of the world. The
deployment of peacekeeping troops abroad was an essential part of this new
strategic concept (see Agrell, 2010, for a historical account).
The increased focus on international military peace operations went hand in
hand with a move towards the use of voluntary recruitment. Compulsory military conscription for males had been the foundation of the military manpower
system in Sweden throughout the 20th century. However, as the focus of the
Armed Forces changed, it became clear that training fewer and fewer conscripts,
who could not be used in international service, was a costly way of manning international missions (Ministry of Defence, 2009, 2010). Eventually, conscription
and mandatory military service in peacetime was (as it turned out, temporarily)
abolished in 2010. The relatively small number of soldiers and sailors needed
for the Swedish Armed Forces was now to be recruited on a voluntary basis and
employed as professionals.
In this thesis, I study some aspects of this transformation. The first part
(comprising papers I and II) focuses on the supply of volunteers to the Swedish
Armed Forces and the economic factors that affect the recruit flow. The second
part (comprising papers III and IV) focuses on international military missions
and the long-term labour market consequences for deployed military veterans.
Through my research, I hope to provide insights into the dynamics of military
recruitment and the impact of international military missions on the lives of
those who serve in them.
2
The Supply of Volunteers
The economics of military enlistment
When conscription was abolished in 2010, the Swedish Armed Forces had to
adapt to a new role. In order for voluntary recruitment to be successful, the
Armed Forces needed to become "an attractive employer, requiring favourable
conditions for those serving" (Ministry of Defence, 2009, p. 54). At the time,
however, concerns were raised about the Armed Forces’ ability to compete with
other employers in the labour market. In May 2010, several members of the
Riksdag expressed fears that recruitment would be affected by the business cycle
(Sveriges riksdag, 2010). Similarly, a 2007 report on long-term defence planning
identified economic booms as a significant risk for recruitment and employee
turnover in the Armed Forces (Swedish Armed Forces, 2007).
1
These concerns are indeed warranted from the perspective of economic theory. For those who decide to enlist, the perceived benefits of enlistment must be
greater than the economic costs (Becker, 1993). Economic upturns are likely to
be bad news for military recruiters since the opportunity cost of serving in the
military increases when civilian wages rise or the chance of finding a civilian job
improves. While most employers face similar challenges in attracting labour, the
military differs in its limited ability to hire from outside its organisation. Instead,
the military depend on a steady supply of new recruits entering at the bottom of
the military hierarchy to ensure that there are enough personnel to staff upperlevel positions in the future; senior officers must essentially be "grown" from
within the junior ranks (Asch & Warner, 2001; Warner, 1995). Thus, shortfalls
in recruitment might have lasting effects on the performance on the military organisation; to some extent, recruitment outcomes today will impact the quality
of generals 30 years from now.
The idea that military recruitment outcomes are related to the business cycle is supported by a range of empirical studies from the U.S., which show that
a strong civilian economy makes it less likely for people to enlist (Asch et al.,
2010; Asch et al., 2009; Brown, 1985; Ellwood & Wise, 1987; Simon & Warner,
2007; Warner et al., 2003). Generalising empirical findings across countries is
difficult, however. People’s preferences towards military work can vary greatly;
while some are willing to serve for little pay, others may be hesitant to choose a
military career even with high compensation (Rosen, 1974, 1986). If people have
very divergent opinions about military life, then there will be relatively consistent number of volunteers each year, regardless of the state of the economy. On
the other hand, if people are more similar in their appreciation of military life
and many are indifferent between a civilian occupation or a military one, recruitment outcomes are likely to be more sensitive to changes in the attractiveness of
civilian job alternatives. Thus, the distribution of preferences in the population
determines how much the civilian economy actually affects enlistment supply
(Rosen, 1986; Warner, 1995). Ultimately, whether the state of the economy is
important for Swedish recruitment outcomes is an empirical question.
Moreover, the military not only cares about the number of recruits, but also
about the characteristics of those who volunteer for service. In particular, the
military is interested in attracting high-quality recruits, in terms of physical and
mental abilities. Enlistment incentives might not be the same for all individuals, however. Rather, opportunity costs will vary between different types of
individuals, as some have more lucrative civilian career prospects than others.
If recruit quality is positively correlated with civilian career prospects, then, at
the margin, high-quality recruits may be more sensitive to enlistment incentives.
This means that a strong civilian economy could have a dual impact on military
recruitment: not only could it reduce the total number of recruits, but it could
also disproportionately reduce the number of high-quality recruits. Hence, selfselection of individuals in and out of the recruit pool could actually worsen the
impact of a strong civilian economy on military recruitment outcomes (Borjas,
2
1987; Roy, 1951). Again, whether or not this is actually the case is an empirical
question.
Understanding the factors that influence the flow of recruits is crucial for
military employers in a voluntary recruitment environment. In the first two
papers of this thesis, I explore the economic factors that affect the supply of
volunteers to the Swedish Armed Forces. I ask two fundamental questions:
does the state of the civilian economy impact the number of people willing to
join the military, and does it affect the quality of those who volunteer? In the
rest of this section, I provide empirical evidence and discuss the implications of
my findings.
Summary of papers [I] and [II]
Does the state of the civilian economy affect the number of people who are
willing to join the military?
The transition to an all-volunteer military in 2010 came as the Swedish economy
was recovering from the global financial crisis. In the first paper of this thesis,
I explore if changing conditions in the civilian labour market affects the supply
of labour to the military. Specifically, I study the effect of civilian unemployment rate on the rate of applications from individuals aged 18 to 25 to initiate
basic military training, using panel data on Swedish counties for the years 2011
through 2015.
Geographical regions that have high unemployment rates also tend to have
high application rates. Figure 1 illustrates this positive association between unemployment rates and application rates, in the cross-section, and over time.
However, geographical regions might have different characteristics that affect
both military applications and unemployment. So, this simple association might
be confounded by all sorts of unobserved background variables, such as the
location of military bases or access to higher education.
To further explore the relationship, I estimated a fixed-effects regression
model. This approach allowed me to to isolate the effect from civilian unemployment by controlling for observed and unobserved differences across regions, as
well as common trends on the national level. Moreover, to account for the possibility of reverse causality, i.e, that changes in the application rate in a region
could influence the youth unemployment rate of that region, I used the variation in unemployment rates for older age groups as an instrument for regional
labour market conditions for the youth population.
The results from the fixed-effects regression analysis support the idea that
falling unemployment rates are actually causing application rates to drop. The
cross-sectional relationship is not simply due to other factors that vary across
regions. Rather, the effect from unemployment on applications becomes stronger
when controlling for unobserved differences across regions. Specifically, the
results indicate that a one percentage point decrease in the unemployment rate
is associated with a 0.3 percentage point decrease in the application rate. Given
3
(2)
3.5
4.0
3.0
Blekinge county
Application rate (%)
Percentage of full population, 18−25 years
(1)
5.0
3.0
2.0
1.0
Gotland county
2.5
2.0
1.5
0.0
1.0
2011
2012
2013
2014
2015
Year
2.0
Application rate
Unemployment rate
3.0
4.0
5.0
6.0
Unemployment rate (%)
Figure 1: Application rates vs. Unemployment rates
Notes: The left panel of the figure shows the annual percentage of the full Swedish population aged 18 to 25 that applied for basic military training over the period 2011-2015,
together with the unemployment rate in the same age group. The right panel contains
a scatter diagram of the cross-section of annual application rates against the unemployment rates by county over the same period. The sizes of the markers are in accordance
with the size of the county population aged 18 to 25. From: “Are Economic Upturns Bad
for Military Recruitment? A Study on Swedish Regional Data 2011–2015.”, by P. Bäckström, 2019, Defence and Peace Economics 30 (7): 813-829. Reprinted by permission of the
publisher (Taylor & Francis Ltd, http://www.tandfonline.com).
that the average application rate at the national level was 1.4 over the studied
period, the results suggest that changes in the civilian labour market can lead
non-trivial fluctuations in the number of applications to initiate basic military
training with the Swedish Armed Forces.
Does the state of the civilian economy affect the quality composition of those
who volunteer?
The results from the first paper of this thesis suggest that fewer individuals want
to join the military in Sweden when conditions in the civilian labour market improve. However, little is known about how the quality composition of volunteers
responds to changes in economic circumstances. Do conditions in the civilian
economy affect which type of people choose to join the military? Is the negative
4
impact of a strong civilian economy on recruitment volumes made worse by a
decline in recruit quality? In the second paper, I explore these questions in the
context of voluntary recruitment to the Swedish Armed Forces.
One measure of recruit quality is intelligence, or cognitive ability. Since the
1940s, the Swedish military has been using cognitive ability tests to help determine the military service of conscripts (Carlstedt, 2000). In line with research
that shows that psychometric measures of cognitive ability are predictive of performance in school and on the job (Deary et al., 2007; Gottfredson, 1997; Schmidt
& Hunter, 2004; Strenze, 2007), cognitive ability has also been found to be an indicator of successfully completing military training (Carlstedt, 1999; Farina et
al., 2019), as well as specific military tasks (Kavanagh, 2005; Scribner et al., 1986;
Winkler, 1999). Moreover, low levels of cognitive ability has been found to increase combat veterans’ risk of developing mental health conditions, such as
post-traumatic stress disorder (PTSD), after service (Gale et al., 2008; Macklin
et al., 1998; McNally & Shin, 1995).
In this paper, I study how cognitive ability test scores of applicants for basic
military training responds to changes in the economic environment. The empirical analysis is based on panel data for Swedish municipalities over the years
2010 to 2016. The results show that application rates from individuals who score
high on the test is more responsive towards changes in the employment rate in
the municipality of origin, compared to the application rate from individuals
who score low. Consequently, if civilian employment rates go up, the average
test score of those who volunteer for military service goes down. More specifically, if the civilian employment rate rises by one percentage point, the share of
volunteers who score high enough to qualify for commissioned officer training
programme falls by two percentage points.
Consistent with the view that a strong civilian economy favours negative
self-selection into the military, the results from this paper suggest that the negative impact on recruitment volumes of a strong civilian economy can indeed be
reinforced by a deterioration in recruit quality.
Why does it matter?
The main findings from the first two papers of this thesis can be boiled down
to one simple statement: conditions in the civilian economy matter for military
recruitment outcomes. In poor economic times, military service may be an attractive alternative to individuals, but this also means the Armed Forces face
challenges in attracting volunteers during strong economic periods. Additionally, my results suggest that the negative impact of a strong civilian economy on
recruitment volumes is made worse by a decline in the quality of recruits. The
main lesson to be learned from this is that the Armed Forces must be proactive in their recruiting strategies in order to overcome challenges associated with
changes in the civilian business cycle.
The government, however, has a unique tool for addressing staffing short-
5
ages in the military: the ability to conscript citizens into military service. In
response to a deteriorating security environment and difficulties in recruitment,
the Swedish government decided to re-instate peacetime conscription for both
men and women starting January 1, 2018. This allows the government to tap
into a larger pool of potential recruits and ensure that the military has the personnel it needs. However, conscription also has economic implications that must
be considered.
Compulsory conscription can be viewed as a form of in-kind tax that allows
the government to collect less in fiscal taxes. So, whether military manpower is
obtained through voluntary recruitment or compulsory conscription is, to some
extent, a matter of how the costs to society of staffing and maintaining the military force are financed (see e.g. Friedman, 1967; Hansen and Weisbrod, 1967;
Oi, 1967; Fisher, 1969; Poutvaara and Wagener, 2007). The findings of the first
two papers of this thesis highlight an important fact: the stronger the state of the
civilian economy, the higher the societal opportunity cost of allocating labour to
the military sector. This is true regardless of the recruitment system. The only
difference is who bears the burden: the taxpayer or the conscript.
Under voluntary recruitment, self-selection of individuals into the military
will assure that the opportunity costs of the recruits is kept at a minimum,
whereas this selection, under a system based on conscription, is ultimately left
in the hands of military manpower planners. As long as the size of the conscription cohort is substantially larger than the demand for military labour, there are
important opportunities for the government to limit the societal cost of military conscription by prioritising occupational preferences and motivation in the
military selection process.1
Moreover, the re-instatement of military conscription in Sweden might seem
like an ideal way to avoid fluctuations in recruit quality by selecting only highquality recruits for military service. However, such a policy may not be optimal
from a social welfare perspective, and it may not be desirable for the military
organisation either. First, since the military does not have to pay a premium
for selecting high-ability individuals, it is unlikely that the draft would balance
a draftee’s productivity while in the military with the opportunity cost of removing them from the civilian labour market. In other words, the individuals
selected for military service would, from a societal perspective, be too smart
(Berck & Lipow, 2011). Second, since enlistment incentives for individuals with
relatively high earning potential in the civilian sector are likely to be relatively
weak, putting too much emphasis on ability might result in conscripts having
too little motivation to remain in the military as professionals after their mandatory service.
The challenge for the military selection system is to balance the needs of the
military with individual opportunity costs and preferences. The results from
the first two papers of this thesis suggest that this balancing act is especially
1 It should be noted, however, that military productivity might not be independent of individual
preferences towards the military (Berck & Lipow, 2011).
6
delicate during economic upturns, when the civilian economy is strong and the
opportunity cost of military service is high.
3
Peacekeeping and Labour Market Outcomes
The labour market consequences of service
Sweden and the Swedish Armed Forces have a long history of contributing to
international peace operations.2 Since the 1950s, close to 70,000 Swedish men
and women have been deployed as peacekeepers in many locations worldwide
(Swedish Armed Forces, 2021).
There is a growing body of literature on the long-term effects of deployment
on the lives of Swedish military veterans. In general, these studies tend to emphasise the physical and mental well-being of the men and women who have
served in peace operations (Michel et al., 2003, 2007; Pethrus, Frisell, et al., 2019;
Pethrus et al., 2017; Pethrus, Reutfors, et al., 2019; Pethrus et al., 2022). However,
we still know very little about how military veterans’ situation on the labour
market after returning home are affected. To fully understand the long-term
consequences of deployment, more research is needed in this area.
Deployment can have both positive and negative effects on subsequent labour
market outcomes for those who serve. On one hand, it has been long known
that exposure to combat and traumatic events can have negative consequences
for soldiers’ mental health (Cesur et al., 2013; Dobkin & Shabani, 2009; Hyams et
al., 1996). Studies from the U.S. have consistently shown that mental health conditions, such as post-traumatic stress disorder (PTSD), are associated with poor
work related outcomes for Vietnam-era veterans, as well as more recent military combat veterans (Amick et al., 2018; Anderson & Mitchell, 1992; Ramchand
et al., 2015; Savoca & Rosenheck, 2000; M. W. Smith et al., 2005). In this sense,
military service in combat zones may impair veterans’ ability to re-integrate into
civilian life and the civilian labour market after returning home. Additionally,
military service can interrupt veterans’ civilian careers, leading to lost labour
market experience and delayed investments in human capital that can worsen
their labour market outcomes (Albrecht et al., 1999; Angrist, 1990; Lyk-Jensen,
2018; Paloyo, 2014).
On the other hand, soldiers may develop valuable new skills and receive
training during their service that could be useful in a civilian job. For instance,
military leadership training, discipline, and experience working with others under difficult conditions may be beneficial and lead to improved outcomes on
the labour market after returning home (Elder, 1986; Goldberg & Warner, 1987;
Grönqvist & Lindqvist, 2016; Kleykamp, 2009; Mangum & Ball, 1989). These
2 Here, the term peace operations refers to military operations based on a mandate from the UN
Security Council, including both peace keeping and peace enforcement. I use the term peacekeepers to
describe those serving in all types of UN-mandated peace operations.
7
skills can help veterans transition from the military to civilian work environments, and may be particularly valuable for members of less advantaged groups.
Indeed, a recent study by Greenberg et al. (2022) finds that military service in
the U.S. promotes social mobility by expanding post-service employment opportunities for minorities.
In the last two papers of this thesis, I contribute to the existing literature
by studying the effects of deployment to an international peace operation on
veterans’ subsequent labour market outcomes. The papers aim to answer two
important questions: Does peacekeeping affect earnings in the long term, and
are veterans at an increased risk of becoming marginalised in the labour market
after returning home? The rest of this section summarises my findings and
discusses the implications of my results.
Summary of papers [III] and [IV]
Does peacekeeping affect earnings in the long run?
Despite Sweden’s long history of participating in international peace operations,
there has been surprisingly little research on how these experiences affect veterans’ labour market outcomes in the long run.
In the third paper of this thesis, I and my co-author Niklas Hanes study the
effect of peacekeeping on post-deployment earnings for Swedish veterans. Using
rich administrative data, we followed a sample of more than 11,000 Swedish
veterans, who were deployed for the first time during the period 1993-2010, for
up to nine years after returning home.
Measuring the causal effects of military deployment is complicated by selection issues. All veterans from the time period studied volunteered for service
and were actively screened and selected by the military prior to deployment.
Previous research has shown that this has resulted in Swedish veterans being
a selected group of mentally and physically healthy individuals with above average levels of cognitive and non-cognitive ability (Pethrus, Frisell, et al., 2019;
Pethrus et al., 2017; Pethrus, Reutfors, et al., 2019). Since these pre-deployment
characteristics are likely to be correlated with potential post-deployment labour
market outcomes (Edin et al., 2022; Lindqvist & Vestman, 2011), simply comparing veterans to the general population is likely to lead to biased estimates of the
effects of service.
To address selection bias, we used a difference-in-differences propensity score
matching approach that accounted for a wide range of individual characteristics,
including ability, health, and pre-deployment labour market attachment. This
allowed us to adjust for observed pre-deployment differences, as well as for selection bias stemming from unobserved differences between individuals that are
constant over time (Heckman et al., 1998; Heckman et al., 1997; J. A. Smith &
Todd, 2005).
Our results indicate that, on average, the veterans in our sample did not experience any large long-term earnings effects as a result of their service. Indeed,
8
1500
Effect on annual earnings (100s of SEK)
500
1000
0
-3
-2
-1
0
1
2
3
4
5
6
Time to/since first deployment (years)
7
8
9
Figure 2: Impact of deployment on average annual earnings.
Notes: Matched difference-in-differences estimates of the average treatment effect from
first-time deployment 1993-2010 on veterans’ annual earnings (100s of SEK in 2019 prices)
for up to nine years after deployment. Error bars represent 95% confidence intervals.
Year 0 refers to the calendar year when a veteran was deployed for the first time. Baseline
year is year -2. 100 SEK is approximately $10, £8 or 10 euro. From: "The Impact of
Peacekeeping on Post-Deployment Earnings for Swedish Veterans.”, by P. Bäckström and
N. Hanes, 2023, Umeå Economic Studies, No. 1010.
Swedish veterans from the studied period tend to earn more than conscripts
from the same birth cohort. However, once we adjust for non-random selection into service, this earnings advantage disappears. Figure 2 illustrates the
impact of deployment on average earnings, after accounting for observed and
unobserved differences between veterans and non-veterans. For the full sample of veterans, the point estimates of the earnings effects are close to zero for
all follow-up times beyond the first year after returning home, with confidence
intervals that are small enough to rule out any large long-term earnings effects.
Does peacekeeping increase the risk of labour market marginalisation?
The Swedish peacekeepers who were deployed to Bosnia in the 1990s found
themselves in the midst of a violent civil war marked by war crimes and atroc9
ities, and were at times under severe pressure. Over the years, the well-being
of these veterans has been a concern for many people, but little is known about
how they have fared on the labour market after returning home.
In the fourth paper of this thesis, I provide novel evidence on the relationship between military deployment to Bosnia and adverse outcomes on the
labour market. The analysis is based on rich administrative data for a sample of 2275 young Swedish veterans who served as peacekeepers in Bosnia at
some point during the years 1993–1999. Using propensity score matching, I followed these veterans for up to 20 years and compared the veterans’ risk of being
marginalised in the labour market to that of a matched comparison group of
non-veterans from the same birth-cohort.
I find that veterans who were deployed to Bosnia in the 1990s did not face
any increased risk of long-term labour market marginalisation after returning
home. Figure 3 illustrates the impact of deployment to Bosnia on work disability, social-welfare assistance and long-term unemployment. Even though the
veterans experienced an increased risk of unemployment in the years immediately following return from service, in the long run their attachment to the
labour market is not affected negatively by their service. Despite the challenges
that these soldiers faced, my findings show that their deployment to Bosnia did
not have a negative impact on their labour market outcomes in the long run.
10
.03
Work disability
.005
Proportion
.01
.02
Estimated effect
0
-.005
-.01
0
-.015
0
4
8
12
16
Years to/since deployment year
20
0
4
8
12
16
20
Years to/since deployment year
Social welfare assistance
Proportion
.05
Estimated effect
.1
.02
0
-.02
0
-.04
0
4
8
12
16
Years to/since deployment year
20
0
4
8
12
16
20
Years to/since deployment year
Long-term unemployment
Proportion
.1
Estimated effect
.2
.1
0
0
-.1
0
4
8
12
16
Years to/since deployment year
20
0
Veterans
4
8
12
16
20
Years to/since deployment year
Matched comparisons
Figure 3: Impact of deployment to Bosnia on labour market marginalisation
Notes: The left panel of this figure shows the observed outcomes for a sample of 2275
veterans deployed to Bosnia in the 1990s (solid line) together with the outcomes for the
matched comparison group of birth-cohort peers who did not serve (dashed line). The
right panel shows the estimated average treatment effect on the treated (ATT), together
with 95% confidence intervals. All outcome variables are indicator variables (i.e., dummy
variables). Year 0 refers to the calendar year when a veteran was deployed for the first
time. From: "Swedish Veterans After Bosnia: The Relationship Between Military Deployment and Labour Market Marginalisation”, by P. Bäckström, 2023, Umeå Economic Studies,
No. 1011.
11
Why does it matter?
Like in many other countries, there is an ongoing debate in Sweden about the
well-being of military veterans and the long-term consequences of deployment.
Some have argued that military veterans are harmed by their service and that
they struggle to re-integrate into civilian society (see, for example, Strömberg et
al., 2013; and Häggström, 2013), whereas others have warned against letting negative aspects of service dominate the narrative (Neovius et al., 2014; Ramnerup,
2013).
My findings challenge the notion that Swedish veterans struggle on the labour
market. Instead, the last two papers of this thesis show that veterans, on average, perform well on the labour market after returning home. In fact, they do
so well that they manage to keep up, in terms of earnings, with those who did
not serve and therefore had a head start on the labour market. Even the group
of veterans in my sample who arguably experienced the most stressful events
during their service — the men and women deployed to Bosnia during the early
1990s — show no signs of long-term labour market marginalisation after returning home. In the long run, these veterans may even experience less difficulties
than their non-veteran peers in the matched comparison group. These results are
in line with previous Swedish studies that highlight the well-being of Swedish
peace veterans, and should provide important insights, not only for policymakers and military planners, but also for the general public.
Even though it is important not to neglect individual sacrifices and hardships, incorrectly labelling the collective of Swedish military veterans as victims
or sufferers might be harmful, not only for the individual veteran, but for the
status of the whole military profession. Instead, we should acknowledge this
group for who they are: a highly selected group of individuals who not only
have made great contributions to society as peacekeepers abroad, but continue
to do so by being valuable members of the labour force after returning home.
There are, however, some policy points to be made. First, the absence of adverse effects, for the veterans studied in this thesis, is likely to be connected to
active selection, as well as pre-deployment training and post-deployment support. Any changes to the military selection and training system must be carefully
assessed with respect to how they affect protective and/or risk factors for adverse post-deployment outcomes (DiGangi et al., 2013; Weisæth, 1998; Xue et al.,
2015). Second, even though veterans appear to manage well in the labour market
in the long run, depending on the labour market situation at home, they may
still struggle with establishing themselves on the labour market in the short run.
The Swedish Armed Forces plays a key role in making this transition as smooth
as possible for the individual veteran. Third, the absence of adverse average effects must not be confused with the absence of negative outcomes for individual
veterans; the support system for Swedish veterans is a vital part of ensuring that
no individual is neglected, and may very well be part of the explanation for the
findings of this thesis.
12
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