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Estimating the Veteran Effect with Endogenous Schooling When Instruments Are Potentially Weak

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Author Info
Chaudhuri, Saraswata () (University of North Carolina, Chapel Hill)
Rose, Elaina () (University of Washington)

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Abstract

Instrumental variables estimates of the effect of military service on subsequent civilian earnings either omit schooling or treat it as exogenous. In a more general setting that also allows for the treatment of schooling as endogenous, we estimate the veteran effect for men who were born between 1944 and 1952 and thus reached draft age during the Vietnam era. We apply a variety of state-of-the-art econometric techniques to gauge the sensitivity of the estimates to the treatment of schooling. We find a significant veteran penalty.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4203.

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Length: 30 pages
Date of creation: Jun 2009
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Handle: RePEc:iza:izadps:dp4203

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Related research
Keywords: veteran effect; weak instruments;

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Find related papers by JEL classification:
C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables
J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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  1. Saul Schwartz, 1986. "The relative earnings of Vietnam and Korean-era veterans," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 39(4), pages 564-572, July.
  2. Halvorsen, Robert & Palmquist, Raymond, 1980. "The Interpretation of Dummy Variables in Semilogarithmic Equations," American Economic Review, American Economic Association, vol. 70(3), pages 474-75, June. [Downloadable!] (restricted)
  3. Angrist, Joshua D & Krueger, Alan B, 1991. "Does Compulsory School Attendance Affect Schooling and Earnings?," The Quarterly Journal of Economics, MIT Press, vol. 106(4), pages 979-1014, November. [Downloadable!] (restricted)
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  4. Angrist, Joshua D, 1990. "Lifetime Earnings and the Vietnam Era Draft Lottery: Evidence from Social Security Administrative Records," American Economic Review, American Economic Association, vol. 80(3), pages 313-36, June.
    Other versions:
  5. James H. Stock & Jonathan Wright, 2000. "GMM with Weak Identification," Econometrica, Econometric Society, vol. 68(5), pages 1055-1096, September.
  6. Bryant, Richard & Wilhite, Al, 1990. "Military Experience and Training Effects on Civilian Wages," Applied Economics, Taylor and Francis Journals, vol. 22(1), pages 69-81, January.
  7. De Tray, Dennis, 1982. "Veteran Status as a Screening Device," American Economic Review, American Economic Association, vol. 72(1), pages 133-42, March. [Downloadable!] (restricted)
  8. Douglas Staiger & James H. Stock, 1997. "Instrumental Variables Regression with Weak Instruments," Econometrica, Econometric Society, vol. 65(3), pages 557-586, May.
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  9. Mark R. Rosenzweig & Kenneth I. Wolpin, 2000. "Natural "Natural Experiments" in Economics," Journal of Economic Literature, American Economic Association, vol. 38(4), pages 827-874, December. [Downloadable!] (restricted)
  10. Angrist, Joshua & Chen, Stacey, 2008. "Long-Term Economic Consequences of Vietnam-Era Conscription: Schooling, Experience and Earnings," IZA Discussion Papers 3628, Institute for the Study of Labor (IZA). [Downloadable!]
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  11. Angrist, Joshua & Krueger, Alan B, 1994. "Why Do World War II Veterans Earn More Than Nonveterans?," Journal of Labor Economics, University of Chicago Press, vol. 12(1), pages 74-97, January. [Downloadable!] (restricted)
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  12. Card, David, 1999. "The causal effect of education on earnings," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 30, pages 1801-1863 Elsevier. [Downloadable!] (restricted)
  13. Joshua D. Angrist, 1993. "The effect of veterans' benefits on education and earnings," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 46(4), pages 637-652, July.
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