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

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Author Info

  • Hirsch, Barry T.

    ()
    (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.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 740.

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Length: 35 pages
Date of creation: Mar 2003
Date of revision:
Publication status: published in: Journal of Human Resources, 2003, 38 (3), 673-700
Handle: RePEc:iza:izadps:dp740

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Keywords: matched comparison group; civilian earnings; veterans;

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References

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  1. Dehejia, R.H. & Wahba, S., 1998. "Propensity Score Matching Methods for Non-Experimental Causal Studies," Discussion Papers 1998_02, Columbia University, Department of Economics.
  2. Heckman, James J & Ichimura, Hidehiko & Todd, Petra, 1998. "Matching as an Econometric Evaluation Estimator," Review of Economic Studies, Wiley Blackwell, vol. 65(2), pages 261-94, April.
  3. Mehay, S.L. & Hirsch, B.T., 1993. "The Post-Military Earnings of Female Veterans," Working Papers 1993_09_02, Department of Economics, Florida State University.
  4. Stephen L. Mangum & David E. Ball, 1989. "The transferability of military-provided occupational training in the post-draft era," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 42(2), pages 230-245, January.
  5. Alan B. Krueger & Joshua D. Angrist, 1989. "Why do World War II Veterans Earn More Than Nonveterans?," NBER Working Papers 2991, National Bureau of Economic Research, Inc.
  6. LaLonde, Robert J, 1986. "Evaluating the Econometric Evaluations of Training Programs with Experimental Data," American Economic Review, American Economic Association, vol. 76(4), pages 604-20, September.
  7. A. Smith, Jeffrey & E. Todd, Petra, 2005. "Does matching overcome LaLonde's critique of nonexperimental estimators?," Journal of Econometrics, Elsevier, vol. 125(1-2), pages 305-353.
  8. repec:fth:coluec:9899-01 is not listed on IDEAS
  9. John Bound, 1989. "The Health and Earnings of Rejected Disability Insurance Applicants," NBER Working Papers 2816, National Bureau of Economic Research, Inc.
  10. Bruce D. Meyer, 1994. "Natural and Quasi- Experiments in Economics," NBER Technical Working Papers 0170, National Bureau of Economic Research, Inc.
  11. Bryant, Richard R. & Samaranayake, V. A. & Wilhite, Allen, 1993. "The effect of military service on the subsequent civilian wage of the post-Vietnam veteran," The Quarterly Review of Economics and Finance, Elsevier, vol. 33(1), pages 15-31.
  12. Saul Schwartz, 1986. "The relative earnings of Vietnam and Korean-era veterans," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 39(4), pages 564-572, July.
  13. Card, David, 1996. "The Effect of Unions on the Structure of Wages: A Longitudinal Analysis," Econometrica, Econometric Society, vol. 64(4), pages 957-79, July.
  14. James Heckman, 1997. "Instrumental Variables: A Study of Implicit Behavioral Assumptions Used in Making Program Evaluations," Journal of Human Resources, University of Wisconsin Press, vol. 32(3), pages 441-462.
  15. Mark C. Berger & Barry T. Hirsch, 1983. "The Civilian Earnings Experience of Vietnam - Era Veterans," Journal of Human Resources, University of Wisconsin Press, vol. 18(4), pages 455-479.
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Cited by:
  1. Hirsch, Barry T., 2008. "Wage Gaps Large and Small," IZA Discussion Papers 3375, Institute for the Study of Labor (IZA).
  2. 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.
  3. Myoung-Jae Lee & Chun Seng Yip, 2005. "Non-market Leadership Experience and Labor Market Success : Evidence From Military Rank," Labor Economics Working Papers 22464, East Asian Bureau of Economic Research.
  4. 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.

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