Opportunity Costs, Labour Markets, and the Military

As the US entered a recession December, 2007, one market where the effects showed up was for military recruiting [h/t to Jack]:

In 2008, as the stock market cratered and the housing market collapsed, more young members of the Army, Air Force and Navy decided to re-up [re-enlist]. While several factors might explain the rise in re-enlistments, including a decline in violence in Iraq, Pentagon officials acknowledge that bad news for the economy is usually good news for the military.

A straight-forward application of opportunity costs: as the options outside the military look worse, and as the options within the military look better (than they did a few years ago), more people choose the military. Or, as we often say,

People respond to incentives.