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Evaluating the Labor Market Performance of Veterans Using a Matched Comparison Group Design

Author

Listed:
  • Hirsch, Barry

    (Georgia State University)

  • Mehay, Stephen L.

    (U.S. Naval Postgraduate School)

Abstract
A key concern in estimating the effect of military service on civilian earnings is bias from unmeasured differences between military veterans and nonveterans. The effects of activeduty service are estimated using the 1986 and 1992 Reserve Components Surveys, which permit a matched comparison between reservists who are veterans and reservists without active-duty service. Because military entrance requirements are identical for the reserves and active duty, estimated treatment effects embody control for selection by the military and selection by workers for a form of military service. Results are presented for officers and enlisted personnel and by race and era of service. The average impact of active-duty service on civilian earnings is 3 percent among the reservist population, but this average reflects treatment effects of essentially zero for enlisted personnel and 10 percent for officers. Among white enlisted personnel, veteran effects are negative but small. Treatment effects for African-American veterans average about 5 percent. Vietnam-era white draftees are found to have suffered an approximate 5 percent wage penalty and volunteers little penalty, but estimates from the reservist sample are likely to understate negative effects from Vietnamera service.

Suggested Citation

  • Hirsch, Barry & Mehay, Stephen L., 2003. "Evaluating the Labor Market Performance of Veterans Using a Matched Comparison Group Design," IZA Discussion Papers 740, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp740
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    References listed on IDEAS

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    3. Muhammad Asali, 2017. "Military Service and Future Earnings Revisited," Working Papers 005-17 JEL Codes: J24, J3, International School of Economics at TSU, Tbilisi, Republic of Georgia.
    4. Asali, Muhammad, 2015. "Compulsory Military Service and Future Earnings: Evidence from a Quasi-Experiment," IZA Discussion Papers 8892, Institute of Labor Economics (IZA).
    5. Charles Blessings Laurence Jumbe & Arild Angelsen, 2006. "Do the Poor Benefit from Devolution Policies? Evidence from Malawi’s Forest Co-Management Program," Land Economics, University of Wisconsin Press, vol. 82(4), pages 562-581.
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    7. P. Routon, 2014. "The Effect of 21st Century Military Service on Civilian Labor and Educational Outcomes," Journal of Labor Research, Springer, vol. 35(1), pages 15-38, March.
    8. David Card & Ana Rute Cardoso, 2012. "Can Compulsory Military Service Raise Civilian Wages? Evidence from the Peacetime Draft in Portugal," American Economic Journal: Applied Economics, American Economic Association, vol. 4(4), pages 57-93, October.
    9. Jennifer L. Steele & Peter Buryk & Geoffrey McGovern, 2018. "Student Veterans’ Outcomes by Higher Education Sector: Evidence from Three Cohorts of the Baccalaureate and Beyond," Research in Higher Education, Springer;Association for Institutional Research, vol. 59(7), pages 866-896, November.
    10. Christos A. Makridis & Barry T. Hirsch, 2021. "The Labor Market Earnings of Veterans: Is Military Experience More or Less Valuable than Civilian Experience?," Journal of Labor Research, Springer, vol. 42(3), pages 303-333, December.
    11. David Card & Ana Rute Cardoso, 2011. "Can Compulsory Military Service Increase Civilian Wages? Evidence from the Peacetime Draft in Portugal," NBER Working Papers 17694, National Bureau of Economic Research, Inc.
    12. Myoung-Jae Lee & Yip Chun Seng, 2005. "Non-market Leadership Experience and Labor Market Success: Evidence From Military Rank," Working Papers 12-2005, Singapore Management University, School of Economics.
    13. Hou, Benyufang & Liu, Hong & Wang, Sophie Xuefei, 2020. "Returns to military service in off-farm wage employment: Evidence from rural China," China Economic Review, Elsevier, vol. 59(C).
    14. Amy Kate Bailey & Bryan L. Sykes, 2018. "Veteran Status, Income, and Intergenerational Mobility Across Three Cohorts of American Men," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 37(4), pages 539-568, August.
    15. Cesur, Resul & Sabia, Joseph J. & Tekin, Erdal, 2013. "The psychological costs of war: Military combat and mental health," Journal of Health Economics, Elsevier, vol. 32(1), pages 51-65.
    16. Ayan, Davut, 2016. "Unemployment Among the Recent U.S. Veterans," MPRA Paper 117307, University Library of Munich, Germany.
    17. Resul Cesur & Alexander Chesney & Joseph J. Sabia, 2016. "Combat Exposure, Cigarette Consumption, And Substance Use," Economic Inquiry, Western Economic Association International, vol. 54(3), pages 1705-1726, July.
    18. Muhammad Asali, 2018. "Military service and future earnings: Evidence from an Informed Difference-in-Differences (IDID) approach," Economics Bulletin, AccessEcon, vol. 38(3), pages 1583-1589.
    19. Chunkai Zhao & Jianhao Guo, 2022. "Are Veterans Happy? Long-term Military Service and the Life Satisfaction of Elderly Individuals in China," Journal of Happiness Studies, Springer, vol. 23(2), pages 477-508, February.
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    21. Alberto Davila & Marie T. Mora, 2012. "Terrorism and Patriotism: On the Earnings of US Veterans following September 11, 2001," American Economic Review, American Economic Association, vol. 102(3), pages 261-266, May.
    22. Young-Min Ju & Myoung-Jae Lee, 2017. "Control Function Approach for Partly Ordered Endogenous Treatments: Military Rank Premium in Wage," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 79(6), pages 1176-1194, December.

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    More about this item

    Keywords

    matched comparison group; civilian earnings; veterans;
    All these keywords.

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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