Military conscription is one of the constitutive policy bargains of the modern state. From a political economy perspective taxation and conscription may be viewed as substitutable instruments of foreign and defense policy. Existing empirical studies focus mostly on the ''political'' causal link from the choice of military manpower systems (conscript vs. professional) to defense policy as is primarily expressed by the projection of ‘hard’ military force. We, on the other hand, use a time-series cross-section (TSCS) original data set (1950-2005 state-years) to test the ''economic'' causal link from (economic and political) inequality to the choice of military manpower system. We thus seek to estimate a system of structural equations of ‘endogenous foreign and defense policy’. We manage to capture the richness of cross-country and cross-time variation in types of military organization by using both effective and statutory continuous measures of military conscription, in order to control for the discrepancy between legally enacted and effectively enforced levels of conscription. Panel-corrected standard errors and distributed lags are estimated to correct for temporal dependence, policy inertia, and other identification concerns.
