| Before 1997 the compulsory military service was a way for many young French men to obtain their driver's license for free. After the abolition of compulsory conscription in 1997, this sex-based discrimination disappeared. We show that the suppression of such an opportunity was followed by a fall in young men's possession of a car driver's license, particularly for men living in urban areas. Because the causal relation between holding a driver's license and employment is hard to demonstrate, we use this policy change as an instrument for the former. Indeed estimates demonstrate a negative impact of the abolition of the draft on employment for young men and a likely causal impact of holding a driver's license on employment probability. However, we must remain cautious since we cannot fully show that the effect is due to the lack of a driver's license in itself rather than the lack of other abilities the national service could provide (e.g. professional courses). Then, we show that the abolition of the draft also had a more direct and uncontroversial effect on the (heavily regulated) driving schools industry: the shock on driver's license demand that the reform induced resulted in increased rents. These rents translated in an increase in the number of driving schools, a stability in total employment, a decrease in average employment, no increase of total sales or value-added, no obvious decrease in profits per school, but an increase in wages paid to the teachers in those cities that had many young men. Hence, those who benefited from increased demand have been the teachers, in limited supply, not the incumbent schools or the consumers. We believe that such an outcome is potentially inefficient and is due to the heavy entry regulations distorting the economy of this industry. |
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