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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

    ()
    (Department of Economics, Vanderbilt University)

  • Ricardas Zitikis

    ()
    (Department of Statistical and Actuarial Sciences, University of Western Ontario)

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 which 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 non-veterans up to $12,610 (in 1978 dollars), thereby indicating that there was higher social welfare and lower poverty experienced by non-veterans in the decade-and-a-half following military service.

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File URL: http://www.accessecon.com/pubs/VUECON/vu11-w11.pdf
File Function: First version, September 2011
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Bibliographic Info

Paper provided by Vanderbilt University Department of Economics in its series Vanderbilt University Department of Economics Working Papers with number 1111.

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Date of creation: Sep 2011
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Handle: RePEc:van:wpaper:1111

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Web page: http://www.vanderbilt.edu/econ/wparchive/index.html

Related research

Keywords: Treatment effect; Earnings; Hypothesis test; Stochastic dominance; Initial dominance; Crossing point; Causal effect;

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  1. 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).
  2. Linton, Oliver & Song, Kyungchul & Whang, Yoon-Jae, 2010. "An improved bootstrap test of stochastic dominance," Journal of Econometrics, Elsevier, vol. 154(2), pages 186-202, February.
  3. 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..
  4. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-66, May.
  5. 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.
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