CAPITAL–LABOUR SUBSTITUTION IN UK ARMED FORCES.

This paper estimates the elasticity of substitution ( s ) between military personnel and other military inputs, building on a study by Ridge and Smith published in 1991. The major difference is that this paper uses data on the average military wage, which Ridge and Smith did not, allowing a much more flexible specification of both the demand and supply equations. Accounting for a structural break at the end of the Cold War, it finds s likely to be some small positive number, much lower than previous estimates suggest. [ABSTRACT FROM AUTHOR]