Draft lottery effects on schooling, earnings and the next generation

Do parents with more schooling have children with more schooling because of their schooling? To identify the effect on offspring schooling, we study fathers subject to a peacetime military draft lottery in Denmark, a lottery providing exogenous schooling variation. The father-offspring schooling correlation is 12 percent after controlling for father cognitive test scores and grandparent schooling. We find that father random assignment to nine months of military service reduces father’s schooling by nine months, implying a return to schooling of 4.9 percent and a reduction in father’s lifetime earnings by 4.2 percent, but find no significant effect on offspring schooling.