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Examining the Distributional Effects of Military Service on Earnings: A Test of Initial Dominance

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  • Christopher J. Bennett
  • Ričardas Zitikis

Abstract

Existing empirical evidence suggests that the effects of Vietnam veteran status on earnings in the decade-and-a-half following service may be concentrated in the lower tail of the earnings distribution. Motivated by this evidence, we develop a formal statistical procedure that is specifically designed to test for lower tail dominance in the distributions of earnings. When applied to the same data as in previous studies, the test reveals that the distribution of earnings for veterans is indeed dominated by the distribution of earnings for nonveterans up to $12,600 (in 1978 dollars), thereby indicating that there was higher social welfare and lower poverty experienced by nonveterans in the decade-and-a-half following military service.

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File URL: http://hdl.handle.net/10.1080/07350015.2012.741053
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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Journal of Business & Economic Statistics.

Volume (Year): 31 (2013)
Issue (Month): 1 (January)
Pages: 1-15

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Handle: RePEc:taf:jnlbes:v:31:y:2013:i:1:p:1-15

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  1. Horvath, Lajos & Kokoszka, Piotr & Zitikis, Ricardas, 2006. "Testing for stochastic dominance using the weighted McFadden-type statistic," Journal of Econometrics, Elsevier, vol. 133(1), pages 191-205, July.
  2. Chaudhuri, Saraswata & Rose, Elaina, 2009. "Estimating the Veteran Effect with Endogenous Schooling When Instruments Are Potentially Weak," IZA Discussion Papers 4203, Institute for the Study of Labor (IZA).
  3. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-66, May.
  4. Joshua Angrist & Alan Krueger, 1991. "Estimating the Payoff to Schooling Using the Vietnam-era Draft Lottery," Working Papers 670, Princeton University, Department of Economics, Industrial Relations Section..
  5. Oliver Linton & Kyungchul Song & Yoon-Jae Whang, 2009. "An Improved Bootstrap Test of Stochastic Dominance," Cowles Foundation Discussion Papers 1713, Cowles Foundation for Research in Economics, Yale University.
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