Paper to be presented at DRUID18Copenhagen Business School, Copenhagen, Denmark

June 11-13, 2018

Nurturing leadership: Military conscription and leader inventors

Luisa GagliardiGeneve University

Département d'histoire, économie et sociétéLuisa.Gagliardi@unige.ch

Myriam MarianiBocconi University

myriam.mariani@unibocconi.it

AbstractLeadership skills are valuable for those who master them and for their employer organizations. It istherefore important to understand whether these skills are innate or can be built through specifictraining activities. Our paper investigates this issue by studying whether being exposed to a trainingprogram that affects leadership competences during the ?impressionable years? ? i.e. the militaryservice - increases the probability to take up leadership positions later in life. The empirical testexploits a policy discontinuity in the US, which abandoned the compulsory draft in 1972, and data onleadership responsibilities of employees in industrial research. In a difference-in-difference researchdesign, we compare US individuals treated by the policy change with (untreated) individuals incountries that kept enforcing active conscription, before and after the policy change. Our results pointto a significant and sizeable negative impact of the policy change on the probability of individuals totake up leadership roles later in life. As a side effect, however, the abandoning of the compulsory draftgenerates relevant re-distribution consequences by aligning the gender odds to be in leadershippositions. We discuss the implications of this study with specific reference to the military setting and,more generally, with reference to training policies that by targeting specific population groups canproduce unintended long-term consequences and inequalities.

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Nurturing leadership: Military conscription and leader inventors

This Version: February 2018

Abstract

Leadership skills are valuable for those who master them and for their employer organizations. It is

therefore important to understand whether these skills are innate or can be built through specific

training activities. Our paper investigates this issue by studying whether being exposed to a training

program that affects leadership competences during the “impressionable years” – i.e. the military

service - increases the probability to take up leadership positions later in life. The empirical test

exploits a policy discontinuity in the US, which abandoned the compulsory draft in 1972, and data on

leadership responsibilities of employees in industrial research. In a difference-in-difference research

design, we compare US individuals treated by the policy change with (untreated) individuals in

countries that kept enforcing active conscription, before and after the policy change. Our results point

to a significant and sizeable negative impact of the policy change on the probability of individuals to

take up leadership roles later in life. As a side effect, however, the abandoning of the compulsory draft

generates relevant re-distribution consequences by aligning the gender odds to be in leadership

positions. We discuss the implications of this study with specific reference to the military setting and,

more generally, with reference to training policies that by targeting specific population groups can

produce unintended long-term consequences and inequalities.

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1. Introduction

Leadership is important in terms of both individual returns (e.g., Kuhn and Weinberger 2005) and

firms’ and social welfare (e.g., Jones and Olken, 2005, Yukl, 2008). It involves decision-making

capabilities, team building, delegation and supervision of tasks, and guidance of others’ work. Leaders

who are good at these activities increase the performance of people they lead, and this positive

feedback, in turn, feeds leadership. The value of these competences has led business schools all over

the world to launch leadership-building courses and boot camps, and it is witnessed by firms’ hiring

strategies that rate leadership skills high as a candidates’ requisite.

A key question, therefore, is whether leadership capabilities relate entirely to some natural talent, or

they can also be taught. Our study focuses on a typology of training, i.e. the military draft, which

exposes young individuals to a competence building training during the impressionable years (ages

18–25, e.g., Hess and Torney-Purta 1967, Eisenberg et al. 1999, Carreri and Teso, 2017), and that

parallel the type of experience and high-responsibility tasks of managers in the labour market (Liang,

Wang, Lazear, 2016, p. 25). Specifically, it investigates whether being exposed to this experience

increases the probability to take up leadership roles later in life.

There is evidence that the experience in the military service contributes to the development of

managerial capabilities.1 Dan Senor and Saul Singer in their Start-up Nation book about the economic

transformation of Israel dedicate an entire chapter to the features of the Israeli’s military service as

one of the factors that contributed to form the “leadership, teamwork and mission-oriented skills and

experience” needed to develop entrepreneurial spirit and success (Senor and Singer, 2009, p. 234).

Philippe de Weck, former General Manager at UBS, points to his experience in the military service as

a milestone for the development of his managerial profile arguing that - especially for earlier cohorts

- it provided the kind of leadership training that is nowadays offered in business schools (Mach et al,

2011). Surveys in companies such as Goldman Sachs, reveal that the time spent in the army offered a

unique training experience to employees in managerial consulting (Nassiri, 2018). Accordingly, large

multinational enterprises such as General Electric – which has been widely recognised for its

unparalleled success in fostering leadership capabilities (Day and Halpin, 2001) - nowadays offer

specific programs for the recruitment of employees with previous experience in the army.2

We develop our analysis from these premises and exploit the experience with the training provided

by the compulsory military draft to contribute to the scholar debate on the innate vs. induced

determinants of leadership (e.g. Day, 2012; Lazear, 2012).

The empirical test focuses on a sample of male individuals in working age population (29-65 years old)

employed in industrial research. We make use of survey data on more than 6900 inventors belonging

to different age cohorts and reporting information on their leadership responsibilities at the employer

company. To single out the contribution of the military service to leadership outcomes, we exploit an

ideal setting that is the change in the US conscription law in 1972. The policy change became effective

in 1973, the first year in which male individuals aged 18 were not anymore subject to the mandatory

1 It is important to note that our study looks at the implications of the military service on leadership outcomes only. It does not account for alternative effects that the experience with the Army may have on other individual outcomes, such as lifetime earnings (Angrist, 1990; Angrist and Krueger, 1994), educational attainment (Bound and Turner, 2002), health and socioeconomic conditions (MacLean and Elder, 2007). 2 https://www.ge.com/careers/working-at-ge/junior-officer-leadership-program

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military service. We employ a difference-in-difference research design where the effect of the

treatment is identified by comparing cohorts of individuals in the US with the same cohorts in

countries that stick to conscription, before and after the policy change. We take advantage of the fact

that the policy change in the US reflects the evolution of the public debate on the topic and it is clearly

exogenous to individual characteristics, including leadership attitudes and inclinations. In fact,

conscription was abolished in the aftermath of the Vietnam War as a consequence of the pervasive

diffusion of anti-war movements. Being initially proposed by Nixon during the presidential elections

of 1968, the end of the draft was finally approved few years later after a prolonged battle at the

Senate.

Our results show that male individuals belonging to cohorts born after 1972 have a probability to fulfill

leadership roles later in their life that is about 5.7% lower than individuals of the same cohorts that

have not been exposed to the policy change. This result suggests that competency building training

during the impressionable years, when attitudes and abilities can be shaped and enhanced to then

crystalize and hardly change over time, is an important determinant of future managerial outcomes.

Our findings are robust to the inclusion of cohort and country fixed effects, and linear country trends

factoring out any concurrent country-cohort specific trend potentially affecting leadership

opportunities. They are also robust to controlling for a wide set of individual characteristics, including

work-leisure life balance, education, tenure, experience, productivity, risk attitudes, marital status

and number of children, mobility and firm size.

Finally, we dig into the implications of our findings by looking at the effect of the treatment on groups

of workers that were not directly affected by the end of conscription, i.e. female employees.

Conceptually, the abolishment of the mandatory military service can be interpreted as the elimination

of a gender biased treatment exposing male individuals to a form of competency building training that

was unavailable to women, independently on their individual characteristics. We find that, by re-

equalizing the odds of developing leadership attitudes, the treatment increases by 6% the relative

probability to observe women in leadership roles for later cohorts. Overall, this finding suggests that

targeting specific population groups in policy design brings along important distributional

consequences.

The remaining of the paper is organized as follows. The next paragraph discusses the link between

being exposed to the training provided during the military service and leadership outcomes in the light

of the debate over the possibility to nurture leadership capabilities. Paragraph 3 presents the research

design; it provides the historical background and overview the main features of the US military service

and it describes the data and methodology used in the empirical analysis. Paragraph 4 shows the main

results and robustness checks. Section 5 concludes this paper.

2. Leadership and military conscription

Leadership is studied extensively in the literature in different fields. There are comprehensive reviews

articles, such as Barrow (1977), Yukl (1989), House and Aditya (1997) and Antonakis et al. (2012),

books (e.g., Antonakis, 2017) and scientific journals specialized on leadership research (e.g., The

Leadership Quarterly). A large part of this literature focuses on leaders’ personal characteristics

including physical characteristics (e.g., Lindqvist, 2012), degree of power, tasks and activities, and on

the context variables that make them effective in private and public domains. Other strands of

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research, mostly in economics, study leadership as an information-based issue (e.g. Hermalin 1998

and 2007).

Among the contributions that examine the factors affecting leadership, a relevant debate relates to

whether leadership is a matter of nature or nurture. Thus, for example, by relating high-school leaders

with adults’ managerial occupations, and holding constant cognitive skills, Kuhn and Weinberger

(2005) demonstrate that leadership is “teachable”. Lazear (2012) shows that the acquisition of general

skills predicts the development of leadership capabilities. Day (2012) investigates the nature of

leadership development and, after reviewing the existing evidence on the topic, he concludes that,

for a large part, leaders are not born as such; rather, they develop through some nurturing processes.

Our study falls into this group of contributions. It investigates the effect of a leadership enhancing

training that individuals undergo in a period of their lives (“the impressionable years”) in which they

are most receptive to external factors and learning experiences. The type of training we focus upon is

the one provided by the military conscription.

The study of whether the military draft is a leadership enhancing training tool – as it is sometimes

described and assumed – offers an interesting angle of analysis. In fact, as emphasized by Bass (2008)

“In industrial, educational, and military settings, and in social movements, leadership plays a critical,

if not the most critical, role, and is therefore an important subject for study and research (Bass, 2008,

p.25).3 Also, as noted already, Senor and Singer (2009) describe the role of the Army for the

development of the Israeli entrepreneurial attitude and success. Large companies such as UBS,

General Electric, Goldman Sachs point to the experience in the military service as an important

training session to acquire the leadership capabilities that turned out to be key in the labour market

later on.

In addition, law changes related to the compulsoriness of the military service provide an ideal setting

to estimate a more general causal relationship between the effectiveness of training programs and

the development of leadership capabilities. In fact, causality concerns have typically affected related

studies on this matter. Lazear (2012) points out that while the research on leadership has addressed

all its aspects and effects, it is still in need of more “scientific proof” to improve our understanding in

the field. Similarly, Day (2012) concludes the discussion about “nature or nurture” with a look at how

to improve empirical research on leadership. Antonakis et al. (2010) make a similar claim and, by

analyzing a sample of 110 articles on leadership that appeared in top-tier journals, finds that between

two-thirds and 90% of them cannot establish causality links, thus encouraging research that improve

on this aspect. A key challenge is that leadership attitudes and capabilities are endogenous to other

individual characteristics, which are often difficult to fully control for. As such, the observed leadership

outcomes may be the result of the interaction between innate and nurtured capabilities. To single out

the “nurturing effect”, we exploit an exogenous shock in the US conscription law and identify whether

being exposed by the training provided during the military service affected the acquisition of

leadership capabilities while factoring out the role of innate leadership attitudes that, in our

identification approach, are randomly distributed with respect to the policy shock.

Indeed, during the military service, the draftees are subject to intensive physical, emotional and

mental training. The basic induction is aimed at teaching tactical and survival skills along with how to

3 The quote is also reported in the first chapter of “The nature of leadership” book by Day and Antonakis (2012).

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shoot, rappel, and march. This includes the ability to provide or follow orders and respect rank, which

requires being exposed to strong leadership roles, the importance of teamwork and the development

of engagement skills via situational training exercises. A particular focus is devoted to instilling

confidence and the capacity to deal with unexpected situations.4 This is so, for example, in the US

Army that is especially concerned about the opportunity to build leadership attitudes and capabilities.

For instance, the Fort Leavenworth Research Unit of the US Army Research Institute for the Behavioral

and Social Sciences (ARI) conduits a dedicated research with a strong focus on the human dimension

of command: how to develop better leaders and commanders through innovative education,

development, and training. These efforts converge into the Army leader development programs which

target specific areas of interest, such as best practices to combine ideas into a holistic program, to

stimulate the commitment to developing subordinates, to reward and challenge existing paradigms

for leader development (Day and Halpin, 2001).

3. Research design

a. A snapshot of the US Military Service

The military service in the United States used to be subject to conscription, commonly known as the

draft, over most of the country recent history up to 1972. Conscription has been largely enforced by

the federal government in four conflicts: the American Civil War, World War I, World War II, and the

Cold War (including both the Korean War and the Vietnam War). From 1940 to 1947 conscription was

regulated by the Selective Training and Service Act that required all men from their 18th birthday until

the day before their 65th birthday to register. Draftees were then selected by a national lottery to

determine the order of people being called up for active service. If drafted, a man served on active

duty for 12 months, and then in a reserve component for 10 years or until he reached the age of 45,

whichever came first.

The Selective Training and Service Act was replaced by the Selective Service Act in 1948, when the

Selective Service System was established as an independent agency of the United States Government

maintaining information on those potentially subject to military conscription. Virtually, all male US

citizens and male immigrant non-citizens between the ages of 18 and 25 were required by law to have

registered within 30 days of their 18th birthdays and be eligible for a service of 21 months. With the

outbreak of the Korean War the active-duty service time increased from 21 to 24 months starting from

1951. Students attending a college or training program full-time could request an exemption, which

was extended as long as they were students. From 1967 onwards, the ages of conscription were

expanded to the band 18 to 35. Students were still allowed for an exemption until the completion of

a four-year degree or the 24th birthday, whichever came first. The draft was officially abolished in

1972 after a prolonged discussion in the Senate (Chambers and Anderson, 1999; Bradford, 2003). In

December 1972 the last men were conscripted; they were born in 1952 and reported for duty in June

1973. In the same year, a drawing was held to determine draft priority numbers for men born in 1953,

but no further draft orders were issued. In 1973, 1974, and 1975, the Selective Service assigned draft

priority numbers for all men born in 1954, 1955, and 1956, in case the draft was extended, but it was

never put in practice.

b. Data and methodology

4 https://www.bls.gov/careeroutlook/2007/spring/art02.pdf

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Data. We gather information on individuals from the InnoS&T survey, which focuses on employees in

industrial research (i.e., “inventors”) censed in 2009 and 2011 who patented at least once with the

European Patent Office between 2003 and 2005.5 For the purpose of this analysis, we restrict the

sample to male employees in working age at the time of the invention (29-64 years old), that is

individuals born between 1946 and 1982.

The final dataset includes 6971 employees with details on the inventors’ educational background,

employment status, employer type, mobility, invention process, job motivations, the role played

within the employer organization, year and country of birth. Most importantly, InnoS&T data have the

valuable advantage to provide information on leadership responsibilities within the organization,

which allows us to construct several measures of leadership.

Our preferred variable, i.e. LEADERSHIP, takes value 1 if at least one person had to report to the

surveyed inventor at the time of the invention, and 0 if the inventor had no responsibility over the

work of others.6 Then we built other indicators of leadership roles, such as the variable

LEADER_PEOPLE that measures the (log) number of people reporting to the inventor at the time of

the invention; TOP MANAGEMENT as a dichotomous variable that takes value 1 if the inventor was

employed in the top management function at the time of the invention; TEAM LEADER that is a

dummy variable that takes value 1 if the invention was the result of team-work in which one person

made all major decisions and, at the same time, the surveyed inventor had a LEADERSHIP position.

Finally, the variable TASK AND BUDGET DECISION POWER takes value 1 if the surveyed inventor had

the autonomy to decide both the allocation of the tasks and budget during the inventive process.7 All

these indicators potentially capture different leadership dimensions that the survey data uncovers

compared to more traditional administrative data sources. Table 1 reports the descriptive statistics

for all leadership variables. Almost 60% of inventors in our sample has at least one reporting person,

with an average of 6.5 reporting individuals. Eight percent of our sample holds a top management

position, while 4% reports the invention to be made by a team in which the inventor had a leadership

role. Finally, 32% of our sample reports task and budget autonomy.

[Table 1 about here]

The survey allows to retrieve information about the date of birth of the employees and their country

of origin, which we used to construct a set of dummy variables for the country of the inventors and

seven 5-years cohorts based on their age, that is, for inventors who were born between 1946 and

1951 (upper bound included), 1952 and 1956, 1957-1961, 1962-1966, 1967-1971, 1972-1976, and

later than 1976. Finally, we construct a full battery of control variables that measure the inventors’

number of work hours, leisure time hours, education, experience, risk attitude, mobility, productivity,

tenure, marital status, children and firm size.

5 The online appendix to their article by Hoisl and Mariani (2017) describes the data collection and the construction of the resulting database and the tests performed to check the data’s representativeness and reliability. 6 Previous studies have used information on whether employees had a managerial position (Lindqvist, 2012) or a “C” level position such as CEO, COO, CFO (Lazear 2012) as proxies of leadership roles. 7 The survey asked the inventors to rate from 0 to 6 the degree of autonomy they had to select tasks and projects, allocate their working time to different tasks and projects, decide over their flexible working hours, set the size of their budget and how to spend it. The variable TASK AND BUDGET DECISION POWER takes the vale 1 if the surveyed inventor scores 5 or 6 in all these dimensions.

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Methodology. To identify the effect of the military service on the probability that individuals take up

leadership roles later in their working life, we take advantage of a policy discontinuity that took place

in the US in 1973, when the country abandoned conscription. Therefore, individuals born in the US

before 1953 were subject to the mandatory military service while those born from 1953 onward did

not have to comply with this prescription. We construct the control group by looking at countries that

stick to the mandatory military service over the entire time period under analysis. This includes most

of the European countries in which conscription was abandoned in recent times only, and in any case

after 1982. Table 2 lists the countries in our sample with reference to their existing policy concerning

the military draft.

[Table 2 about here]

We employ a difference-in-difference research design where individuals born in the US are qualified

as treated while those born in the group of countries with active conscription over the same time

period (i.e. Austria, Switzerland, Czech Republic, Germany, Denmark, Spain, Finland, Greece, Hungary,

Israel, Italy, Norway, Poland, Sweden, Slovenia) represent the untreated control group. The treatment

takes value 1 for cohorts born after 1953 (included), which in the US were subject to the policy change

(Griffith et al. 1997). Table 3 reports information on the distribution of observations in the two groups

(treated and untreated) before and after the policy change.

[Table 3 about here]

The proposed estimation approach relies on the assumption that the policy change in the US that led

to abandoning conscription in 1972 was independent of the characteristics of the potentially affected

individuals, and in particular, that it was not driven by individual leadership characteristics and

attitudes. Indeed, the compulsory military service was abolished in the aftermath of the Vietnam War

as a consequence of the pervasive diffusion of anti-war movements after a prolonged battle in the

Senate. As such, the DIF-in-DIF approach, which provides an estimation on the average effect within

cohorts and countries, makes it possible to disentangle the impact of training activities nurturing

leadership from innate leadership capabilities, assuming that the latter are random with respect to

the policy shock.

Possible challenges to identification would still persist in the case of concurrent unobserved trends

that interact with the policy change we exploit for identification purposes. Examples of such trends

would include the pervasive restructuring of US Corporations taking place during the 70’s, which led

to a scaling down in firm size and the consequent proliferation of roles entailing leadership

responsibilities. An alternative candidate is the 1973-75 economic recession that may have had a

potential detrimental effect on leadership opportunities. Finally, a reduction in leadership prospects

for males could correlate with the pervasive feminist movements taking place during the 70’s. 8

To deal with this issue, we perform a number of estimation checks. First, we include in all

specifications controls for linear country trends, as in Besley and Burgess (2004), together with

8 A concern with selection into the treatment may relate to the fact that some individuals manage to get an exemption from conscription in the pre-policy change period in the US, or some people may decide to volunteer in the Army in the post-policy change period, even in the absence of conscription. However, it should be noted that in both cases, selection would produce an attenuation bias in our results, that is, it would reduce the group of treatment individuals in the pre-policy change period and/or the group of non-treated individuals in the post-policy change period.

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country and cohorts fixed effects. Linear country trends make it possible to control for any unobserved

trend that is country and cohort specific. Therefore, the identification of the effect of conscription

comes from whether law changes led to a deviation from pre-existing country specific trends. This

approach is very stringent as the linear trend controls wash out a large variation in the data.9

Second, we perform placebo tests by artificially postponing the treatment to arbitrary selected dates,

such as 1963 and 1973 (i.e. 10 and 20 years later respectively). In fact, linear country trends would fail

to capture concurrent changes if and only if they fully overlap with the treatment, that is they take

place sharply in 1972. This is unlikely to be the case for most of the plausible alternatives. Firm

restructuring, feminism movements, human rights claims, the economic recession in the 70s are all

cumulative processes that reinforce over time. As such, and contrary to the abolishment of

conscription, they should at least partly reflect into the treatment also when artificially postponed to

subsequent decades.

4. Estimated results

Figure 1 shows the predicted probabilities of LEADERSHIP controlling for inventors’ country and year

of birth dummies and for linear country trends. The pre-treatment lines reveal different levels for the

US, lower than for the control sample, but similar trends. In the post-treatment period, instead, while

a decrease in the predicted probabilities of LEADERSHIP is visible in both the treatment and control

group, the US shows a much more pronounced decline than the control sample. Put differently, the

policy change led to a diversion from the natural country trend manifested into a more accentuated

reduction into leadership outcomes. This is in line with our expectation regarding the negative impact

on leadership capabilities of the elimination of a specific program involving competency building

training activities, such as the military service.

[Figure 1 about here]

Table 4 explores this result further by estimating the relation between leadership and being exposed

to the military service in a regression framework. All specifications report three key covariates: a

treatment group dummy variable that equals to 1 for the USA; a post-treatment period dummy

variable that is equal to 1 if the year of birth of the inventor is later than 1952; a DIF-in-DIF variable

that is the interaction between the post-treatment period and the treatment group dummy, and it is

therefore equal to 1 for US inventors who were born after 1952.

[Table 4 about here]

Column (1) in Table 4 points to a decrease in the probability to have a leadership position for people

born after 1952, and a negative correlation between leadership outcomes and being part of the

treated (US) group. The DIF-in-DIF variable, which captures the effect of the policy change on the

treated group, is positive and statistically significant, suggesting that leadership opportunities in the

US have increased after the abandoning of conscription. Yet, this specification is based on

unconditional correlations. Indeed when the key controls for country and cohorts fixed effects and

9 Besley and Burgess (2014) examine the effect of changes in labor regulation on manufacturing growth in a difference-in-difference framework. This effect is fully washed out by the inclusion of linear country trends. The authors acknowledge the stringency of this specification as well as the need to exercise caution in attributing the effects to labor regulations as opposed to interactions of underlying differences in the industrial relations climate with regulations.

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linear country trends are included (Column 2), the DIF-in-DIF variable turns negative and statistically

significant at 1%. This result remains robust to the inclusion of a full battery of individual controls

(Columns 3). In line with our expectations, the effect of the policy change associated with the

elimination of the compulsory military draft affected negatively the probability of US inventors to fulfil

leadership positions later in life when compared to inventors with similar observable characteristics

and in the same cohort in countries that did not experience any policy change. Overall, the abandoning

of conscription decreases by 5.7% the average probability that US inventors fulfil leadership roles later

in their professional career than inventors in the control group. It is worth noting that some individual

level characteristics are also correlated with LEADERSHIP: for example, holding a BA or MA degree or

a PHD increases by 9% and 22% respectively the probability to perform leadership roles.10 Similarly,

job effort – as measured by working hours – experience, tenure and productivity are positively

correlated with leadership. Finally, more risk prone inventors and inventors employed in medium or

large organizations (rather than in small firms) are also more likely to be in leadership positions.

In table 5, we exploit the availability of additional information about the roles the inventors had at the

time of the surveyed invention and, with the same estimation approach as in table 4 – Column 3, we

estimate the effect of the treatment employing alternative measures that are likely to capture

different types of leadership and managerial responsibilities and decision-making power. The

estimated results show that the DIF-in-DIF variable is negative on all dependent variables, and

statistically significant at 1% level in the case of TEAM LEADER and TASK AND BUDGET DECISION

POWER, which confirms that the employees treated by the abolishment of the compulsory military

draft in the US had a lower probability to take up leadership roles at a later stage of their career

relative to those untreated by the policy change.

[Table 5 about here]

5. Heterogeneous effects and placebo tests

Is the effect of military conscription particularly important for individuals who do not receive other

types of leadership competence training? It is a substitute or complement to other types of leadership

building training people experience during their youth? We address these questions by looking at

other forms of intended or unintended training activities to which individuals may have been exposed

during the impressionable years.

As a first candidate, we consider formal training received in higher education. Indeed higher formal

education can substitute for the military service to the extent to which students are exempt from the

draft. Yet, in the majority of cases based on the US regulation these individuals were expected to come

back to the Army once concluded their educational program. In this latter case, the effect of formal

education could be cumulative to that of the military service, especially if most educated individuals

were more likely to perform leadership roles during their period in the military service.

Results in Table 4 in the previous section indicate that higher education is positively associated with

leadership roles. However, the inclusion of controls for the level of education does not affect much

our main result, thus providing limited support for a substitution effect. In addition, Table 6 we

interact the BA-MA and the PhD dummy variables with the DIF-in-DIF variable. This makes it possible

10 It is worth noting that BA-MA and PHd programs generally take up to 4 years or more. Considering that the

duration of the military service in the US was 21/24 months the magnitude of the effect is fairly similar.

10

to test whether the effect of formal education moderates at the individual level the relation between

the military service and leadership outcomes. The interacted terms are not statistically significant

below standard levels.

Our second unintended training activity concerns the extent to which individuals have been exposed

to managerial leadership roles in their close family group. We construct the variable “Parental

entrepreneurship” that indicates whether “until [the inventor] reached the age of 20, his/her parents

or any of his/her siblings ever operate a business of their own”. This measure may capture both

differences in innate leadership capabilities to the extent to which they are “genetically” transmitted

to the following generation, and the exposure to managerial leadership roles early in life. Neither the

variable for parental entrepreneurship, nor the interaction term with the DIF-in-DIF variable is

statistically significant below standard levels.

[Tables 6 and 7 about here]

Table 7 shows the results of three placebo tests. The dependent variable is LEADERSHIP for all three

specifications. First, we artificially postpone treatment dates to 1963 and to 1973 (instead of 1953) to

prove that we are not capturing concurrent trends to our policy shock. In particular, in case firms

restructuring reflects into our estimates, or the movement for women rights, we would likely observe

an even larger effect due to the cumulative nature of these processes compared to the sharp one-

shot treatment provided by the abolishment of military conscription. Column 1 in Table 7 estimates

the results of a model similar to that in Column 3 of Table 4, with the only difference of setting the

treatment year as for 1963, ten years after the true treatment year. Column 2 uses 1973 as the

treatment year, twenty years after the true treatment year. Accordingly, the DIF-in-DIF (1963) and

DIF-in-DIF (1973) are the interaction terms between the new treatment period and the treated US

country. The estimated coefficient of the post treatment dummy and the DIF-in-DIF variable are

statistically not significant in both specifications, therefore providing support for the effect on

leadership being caused by the abolishment of military conscription only.

Column 4 in Table 7 uses the group of countries who never had military conscription during the

observed period as a control sample, that is, the United Kingdom and Japan. The corresponding DIF-

in-DIF variable is the usual interaction term between the US and the treatment year (1953). As the

group of untreated countries is however different, the resulting sample changes being smaller than

before in terms of number of observations. The estimated results show a negative (though larger than

in Table 4) and statistically significant effect of military conscription on the treated. This is in line with

our expectation as the diff-in-diff regressor captures possible divergences from the natural trends due

to the policy in the treated sample with respect to the untreated one (where we assume no changes

in trends).

6. Distribution effects across gender groups

Working age males are the population group directly affected by the policy. Yet, policy actions

targeting a specific set of individuals are likely to generate also indirect effects on untreated groups.

If the military draft affects positively the probability that individuals take up leadership roles in the

workplace by offering young males opportunities for capacity building training activities, then women

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in the same cohorts might be indirectly hit by this gender biased treatment.11 To check whether this

was the case, and the policy change generated re-distribution effects by re-equilibrating the odds of

women and men to take up leadership position in business, we explicitly test the impact of the policy

across gender groups.

We therefore perform the analysis on both working age males and females, that is, people born

between 1946 and 1982. We create a “gender-specific treatment” variable that takes value 0 for non-

treated individuals (i.e., individuals in countries with no change in regulation, which stick to the

compulsory system throughout the period of our analysis, as in the baseline regressions), 1 for treated

males (i.e., US males), and 2 for “treated” females (“potentially treatable” in the US based on their

age cohort but excluded because the treatment is gender specific).

Then, we interact the gender-specific treatment variables with the post treatment variable to estimate

the DIF-in-DIF effect for males and females separately. The DIF-in-DIF (male) now estimates the effect

of the policy change on men (direct effect) while DIF-in-DIF (female) captures the impact of the same

policy on women (indirect effect). Column 1 in Table 7 shows the results for the full sample. The DIF-

in-DIF variable is negative for males, confirming core findings in the main regression; it is positive for

females, suggesting that the policy change, by re-equilibrating the “initial conditions” across gender

groups, restored similar opportunities to fulfil leadership roles later in their job career. Put differently,

assuming that innate leadership capabilities are randomly distributed across gender, by eliminating a

program that provided to young men an extra training towards their development, the policy change

equalizes the odds of being a leader. Therefore, the positive effect associated to the DIF-in-DIF

(female) regressor captures the catching up in the probability to fulfil leadership roles by women as a

consequence of the elimination of an “unequal” treatment.

Columns 2 and 3 repeat the exercise by using a sample of male and female inventors matched on all

control variables included in Table 3 (column 4). This limit the possibility that our results are driven by

the fact that male individuals are systematically different than female employees. The estimated

results for the DIF-in-DIF regressor for both males and females are consistent with those in Column 1,

though the limited number of observations affects the precision of the estimates.

[Table 8 about here]

7. Concluding remarks

Leadership skills are valuable for both individuals and institutions and, as such, they have been studied

extensively. Particular attention has been given to addressing the question of whether leadership is a

matter of nature (i.e., it depends on some natural talent of the individuals) or nurture (i.e. is can be

taught or it develops through some forms of specific competence training experience).

Our study contributes to this strand of literature by investigating the effect of a specific typology of

training, i.e. the military conscription, which provides young individuals in their “impressionable

years” with training activities and life experience that may affect their likelihood to develop leadership

capabilities. We observe the leadership and managerial roles of a large sample of employees who

work in industrial research in different countries, and estimate how the probability to take up these

11 A recent newspaper article in The Sunday Times announces that the special forces in the United Kingdom are considering changing their tough selection tests by allowing lighter loads and extra time to complete the tests in order to make the selection “fair” for women to join the elite units. It is important to note that this is not about lowering the standard requisites to enter the units; rather, it is a matter of making the chances equal for women and men to get fair access to these opportunities.

12

roles in the labour market is affected by the exposure to military conscription. To this scope, we exploit

a policy discontinuity that saw the US abandoning the compulsory draft in 1973. This policy change

allows to employ a difference-in-difference research design to compare the likelihood of taking up

leadership roles for US individuals with those in countries that kept enforcing active conscription,

before and after the policy change.

Our results reveal a negative impact of abandoning conscription on the probability to perform

leadership roles later in life: male individuals born after 1972 are 5.7% less likely to fulfill leadership

positions at the corporate level than individuals of the same cohorts that have not been exposed to

the policy change. These findings are robust to the inclusion of cohort and country fixed effects, linear

country trends, and to controls for a large set of individual characteristics. Thus, competence building

training of the kind provided by the military draft during the youth, when attitudes and abilities can

be shaped and enhanced, is an important determinant of future leadership outcomes.

Besides identifying the effect of a specific type of training as a nurturing process for individuals’

leadership capabilities, our paper produces two more general contributions. First, although it focuses

on a specific policy setting, our study demonstrates that initiatives or actions envisaging competence

building training activities are important to shape individual outcomes. Second, it shows that by

abandoning the compulsory draft the US experienced important re-distribution effects that re-aligned

the gender odds to be in leadership positions. By eliminating a factor that produces unequal “initial

conditions” between genders, the policy change restored similar opportunities for males and females

in getting access to leadership positions. This is an important example that empirically shows how

policies designed to target specific population groups can produce unintended and long-term

consequences and unequal opportunities between groups of treated and untreated individuals.

Our study has some limitations. We restrict our analysis to a specific category of individuals, that is,

inventors in industrial research, for which we can recover reliable leadership proxies. This remains an

interesting setting as in the context of industrial research the concept of leadership is particularly

nuanced. It does not necessarily refer to formal managerial roles only, but also reflects into the

individual capacity to lead the work of colleagues, assign roles and resources. In fact, the majority of

research projects in industrial research are developed in teams, and team leaders have a key role in

organizing and evaluating the work of others. Moreover, most of the inventors in our sample are

engineers with a strong technical background for whom managerial competences are important

complement. Said that, the application to a specific group may limit the possibility to generalize the

results of our study to different and distant settings. We also focus the identification on a single

country, the US, which offers an ideal setting to test our hypothesis. On the one hand, this provides a

neat research design; on the other hand, however, it may reflect distinctive features of the US military

system where the focus on building leadership attitudes is especially strong and companies are

traditionally keen to value this kind of experience.

The study of leadership would therefore be interesting to analyze with different datasets offering a

cross-country and cross-cohorts perspective. For instance, many European countries have recently

abandoned the military conscription. Extending our setting to these alternative national contexts

would offer the opportunity to focus on different institutional environments where the military

service may provide different sets of leadership and command skills and corporate environments be

more or less prone to value the training provided.

13

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15

Tables and Figures

Table 1: Leadership responsibilities among inventors in industrial research

Variable Obs Mean S.d.

LEADERSHIP 6,971 0.601 0.490

LEADER PEOPLE 6,971 6.557 15.122

TOP MANAGEMENT 6,971 0.080 0.272

TEAM LEADER 6,971 0.045 0.207

TASK AND BUDGET DECISION POWER 6,971 0.323 0.468 Source: Own elaboration on InnoS&T data

Table 2. Military draft policies across countries.

Countries Military draft policy

Austria AT Mandatory draft active (6 months)

Czech Republic CZ Mandatory draft abolished (effective 2005)

Denmark DK Mandatory draft active (4-12 months)

Finland FI Mandatory draft active (6-12 months)

Germany DE Mandatory draft abolished (effective 2011)

Greece GR Mandatory draft active (9-12 months)

Hungary HU Mandatory draft abolished (effective 2005)

Israel IL Mandatory draft active (3 years for men, 2 year for women)

Italy IT Mandatory draft abolished (effective 2005)

Norway NO Mandatory draft active (1 year)

Poland PL Mandatory draft abolished (effective 2008)

Sweden SE Mandatory draft abolished (effective 2011 – reintroduction announced for 2018)

Slovenia SI Mandatory draft abolished (effective 2004)

Spain ES Mandatory draft abolished (effective 2002)

Switzerland CH Mandatory draft active (18-21 weeks + recalls)

United States US Mandatory draft abolished (effective 1973)

Ireland (IR) No mandatory military service

United Kingdom (BG) No mandatory military service since 1960

Japan (JP) No mandatory military service since 1950

Luxembourg (LU) No mandatory military service since 1967

Note: We exclude Belgium, France and the Netherlands as they also abolished conscription during our time

frame in 1994, 1998 and 1996 respectively but yet not early enough to allow for a reasonable number of

observations in the post treatment period, which create issues in the estimation model with country dummies

and linear country trends. The UK, Ireland, Japan and Luxembourg instead are countries where conscription did

not affect any cohort in our sample. Hence, these are countries listed as with no mandatory military service for

the purpose of this study.

Table 3: Sample statistics Pre % Post %

Treated sample 497 41.38 1586 27.49

Control sample 704 58.62 4184 72.51

1201 100.00 5770 100.00

Source: Own elaboration on InnoS&T data

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Table 4: Baseline regressions

Dep Var: LEADERSHIP (1) (2) (3)

Treatment group -0.0591 -0.155*** -0.173***

(0.0349) (0.00780) (0.0105)

Post-Treatment period -0.120*** 0.0310 0.0327

(0.00684) (0.0234) (0.0242)

DIF-in-DIF 0.0214*** -0.0669*** -0.0573***

(0.00684) (0.0160) (0.0139)

Working hours - - 0.0489***

(0.00901)

Leisure hours - - -0.0270

(0.0165)

High School diploma - - 0.0583**

(0.0252)

BA-MA degree - - 0.0911***

(0.0224)

PhD - - 0.223***

(0.0240)

Experience - - 0.0386***

(0.0106)

Tenure - - 0.0306***

(0.00803)

Productivity - - 0.0146***

(0.00345)

Mobility - - 0.00262

(0.0121)

Risk attitude - - 0.152***

(0.0192)

Married - - 0.0891***

(0.0218)

Number of children - - 0.0112

(0.00882)

Medium Firm - - 0.0511***

(0.0162)

Large firm - - -0.0844***

(0.0103)

Constant 0.713*** 0.883*** 0.0299

(0.0349) (0.0136) (0.0595)

Country dummies NO YES YES

Cohort dummies NO YES YES

Linear country trends NO YES YES

Observations 6,971 6,971 6,971

R-squared 0.008 0.080 0.143

Note: *** p<0.01, ** p<0.05, * p<0.1. Estimates based on clustered robust standard errors at the country level.

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Table 5: Alternative dependent variables

(1)

LEADER PEOPLE

(2) TOP

MANAGEMENT

(3) TEAM

LEADER

(4) TASK AND BUDGET DECISION POWER

Dependent variable:

Treatment group -0.583*** -0.113*** -0.121*** 0.106***

(0.0329) (0.00680) (0.00420) (0.0157)

Post-Treatment period 0.167*** 0.0171 0.0367*** 0.0738**

(0.0483) (0.0182) (0.00767) (0.0259)

DIF-in-DIF -0.0434 -0.0175 -0.0242*** -0.0693***

(0.0328) (0.0115) (0.00652) (0.0214)

Constant -2.502*** 0.186*** 0.132*** -0.151*

(0.175) (0.0569) (0.0252) (0.0740)

Country dummies YES YES YES YES

Cohort dummies YES YES YES YES

Linear country trends YES YES YES YES

Observations 6,971 6,971 6,971 6,971

R-squared 0.159 0.130 0.033 0.083

Note: *** p<0.01, ** p<0.05, * p<0.1. Estimates based on clustered robust standard errors at the country level. All columns include controls for work hours, leisure time hours, education, experience, risk attitude, mobility, productivity, tenure, marital status, children and firm size. Estimates based on clustered robust standard errors at the country level.

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Table 6: Formal education and parental entrepreneurship

Dep Var: LEADERSHIP (1) (2) (3)

Treatment group -0.1728*** -0.173*** -0.156***

(0.0107) (0.0105) (0.00962)

Post-Treatment period 0.0327 0.0330 0.0359

(0.0242) (0.0243) (0.0234)

DIF-in-DIF -0.0572*** -0.0628*** -0.0552***

(0.0151) (0.0174) (0.0134)

BA-MA x DIF-in-DIF -0.0001 - -

(0.0154)

BA-MA 0.0910*** 0.0921*** -

(0.0225) (0.0224)

PhD x DIF-in-DIF - 0.0124 -

(0.0184) PhD 0.2226*** 0.220*** 0.218***

(0.0249) (0.0256) (0.0252)

Parental Entrepreneurship x DIF-in-DIF - - -0.0249

(0.0188)

Parental Entrepreneurship - - 0.0272

(0.0192)

Constant 0.0704 0.0704 0.0526

(0.0601) (0.0601) (0.0626)

Country dummies YES YES YES

Cohort dummies YES YES YES

Linear country trends YES YES YES

Observations 6,971 6,971 6,906

R-squared 0.143 0.143 0.142

Note: *** p<0.01, ** p<0.05, * p<0.1. Estimates based on clustered robust standard errors at the country level. All columns include controls for work hours, leisure time hours, education, experience, risk attitude, mobility, productivity, tenure, marital status, children and firm size. Estimates based on clustered robust standard errors at the country level. The variable “parental entrepreneurship” is missing for 65 observations in the sample.

19

Table 7: Placebo tests

Dep Var: LEADERSHIP

(1) T=1963

(2) T=1973

(3) Control sample: countries who

always had conscription

Treatment group -0.180*** -0.188*** -0.223**

(0.0121) (0.0158) (0.0293)

Post-Treatment period (1963) -0.0235 - -

(0.0181) DIF-in-DIF(1963) 0.0154 - -

(0.0129) Post-Treatment period (1973) - 0.0228 -

(0.0255)

DIF-in-DIF(1973) - -0.00119 -

(0.0328)

Post-Treatment period - - 0.0959*

(0.0306)

DIF-in-DIF - - -0.122***

(0.00731)

Constant 0.0701 0.0790 0.116

(0.0576) (0.0578) (0.218)

Country dummies YES YES YES

Cohort dummies YES YES YES

Linear country trends YES YES YES

Observations 6,971 6,971 5,147

R-squared 0.143 0.143 0.173

Note: *** p<0.01, ** p<0.05, * p<0.1. Estimates based on clustered robust standard errors at the country level. All columns include controls for work hours, leisure time hours, education, experience, risk attitude, mobility, productivity, tenure, marital status, children and firm size. Estimates based on clustered robust standard errors at the country level.

20

Table 8: Re-distribution effects – Leadership and gender

Dep Var: LEADERSHIP (1) (2) (3)

Treatment group – Male -0.00691 -0.203*** -0.0856***

(0.00890) (0.0260) (0.0281)

Treatment group – Female -0.157*** -0.446*** -0.346***

(0.0120) (0.0420) (0.0441)

Post-Treatment period 0.0308 -0.00916 -0.0538

(0.0245) (0.0663) (0.0619)

DIF-in-DIF Male -0.0467*** -0.128** -0.0874*

(0.0135) (0.0435) (0.0411)

DIF-in-DIF Female 0.0663*** 0.106* 0.142**

(0.0134) (0.0530) (0.0513)

Constant 0.101* 0.399 0.332

(0.0549) (0.342) (0.325)

Country dummies YES YES YES

Cohort dummies YES YES YES

Female dummies YES YES YES

Observations 7,372 1,504 1,743

R-squared 0.143 0.193 0.187

Note: *** p<0.01, ** p<0.05, * p<0.1. Estimates based on clustered robust standard errors at the country level. Column 1 estimates the specification on the full sample of males and female inventors. Columns 2 and 3 uses a matched sample based on the 4 and 5 closest neighbours respectively. All columns include controls for work hours, leisure time hours, education, experience, risk attitude, mobility, productivity, tenure, marital status, children and firm size, country and cohort dummies and linear country trends. Estimates based on clustered robust standard errors at the country level.

21

Figure 1: Pre-treatment line and post-treatment fitted line of the diff-in-diff estimation

Note: Predicted probabilities are computed by controlling for country and year of birth dummies, and for linear country trends. The small graph in the right-upper part of Figure 1 shows the overall fitted lines for the predicted probabilities of leadership.