Unemployment is a huge indicator of military recruitment.

This paper examines the effect of local labor market conditions on military enlistment in several new dimensions. First, my results for high quality contracts using OLS specifications and the unemployment rate as the measure of labor market conditions (the focus of existing research) are largely consistent with previous literature.83

Using the results in Crow (2019) that indicate it is possible to identify the effect of labor market conditions on low quality contracts, I extend the research on labor market conditions and enlistment beyond high-quality contracts to all contracts, the differential effects on high vs. low-quality individuals, and more importantly, to the much broader population of military applicants. I also use the employment-to-population ratio as a more accurate measure of labor market conditions and provide the first plausibly causal estimates for the effect of local labor market conditions on enlistment.

Overall, my results suggest that the employment-to-population ratio is strongly related to the number of individuals expressing interest in enlisting in the military.

Specifically, my findings show a decreasing employment-to-population ratio results in more individuals applying to the military which directly results in more individuals entering onto active duty (accessions). However, there is also a concomitant increase in the rate of those disqualified. This implies the individuals being influenced to apply for military service by worsening labor market conditions are relatively less qualified to serve on active duty.