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Veterans’ Labor Force Participation: What Role Does the VA’s Disability Compensation Program Play?

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  • Courtney Coile
  • Mark Duggan
  • Audrey Guo

Abstract

We explore trends over time in the labor force participation of veterans and non-veterans and investigate whether these patterns are consistent with a rising role for the Veterans’ Affairs Disability Compensation (DC) program, which pays benefits to veterans with service-connected disabilities and has grown rapidly since 2000. Using 35 years of March CPS data, we find that veterans’ labor force participation declined over time in a way that coincides closely with DC growth and that veterans have become more sensitive to economic shocks. Our findings suggest that DC program growth has contributed to recent declines in veterans’ labor force participation.

Suggested Citation

  • Courtney Coile & Mark Duggan & Audrey Guo, 2015. "Veterans’ Labor Force Participation: What Role Does the VA’s Disability Compensation Program Play?," NBER Working Papers 20932, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:20932
    Note: AG EH LS PE
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    References listed on IDEAS

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    1. David H. Autor & Mark G. Duggan, 2003. "The Rise in the Disability Rolls and the Decline in Unemployment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(1), pages 157-206.
    2. Nicole Maestas & Kathleen J. Mullen & Alexander Strand, 2013. "Does Disability Insurance Receipt Discourage Work? Using Examiner Assignment to Estimate Causal Effects of SSDI Receipt," American Economic Review, American Economic Association, vol. 103(5), pages 1797-1829, August.
    3. David H. Autor & Mark Duggan & Kyle Greenberg & David S. Lyle, 2016. "The Impact of Disability Benefits on Labor Supply: Evidence from the VA's Disability Compensation Program," American Economic Journal: Applied Economics, American Economic Association, vol. 8(3), pages 31-68, July.
    4. Mark Duggan & Robert Rosenheck & Perry Singleton, 2010. "Federal Policy and the Rise in Disability Enrollment: Evidence for the Veterans Affairs' Disability Compensation Program," Journal of Law and Economics, University of Chicago Press, vol. 53(2), pages 379-398, May.
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    Cited by:

    1. Francisco Perez‐Arce & María J. Prados, 2021. "The Decline In The U.S. Labor Force Participation Rate: A Literature Review," Journal of Economic Surveys, Wiley Blackwell, vol. 35(2), pages 615-652, April.
    2. Alan L. Gustman & Thomas L. Steinmeier & Nahid Tabatabai, 2015. "Declining Wealth and Work Among Male Veterans in the Health and Retirement Study," NBER Working Papers 21736, National Bureau of Economic Research, Inc.
    3. Katharine G. Abraham & Melissa S. Kearney, 2020. "Explaining the Decline in the US Employment-to-Population Ratio: A Review of the Evidence," Journal of Economic Literature, American Economic Association, vol. 58(3), pages 585-643, September.
    4. Courtney Coile & Mark Duggan & Audrey Guo, 2021. "To Work for Yourself, for Others, or Not at All? How Disability Benefits Affect the Employment Decisions of Older Veterans," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 40(3), pages 686-714, June.
    5. Francisco Perez-Arce & Maria J. Prados & Tarra Kohli, 2018. "The Decline in the U.S. Labor Force Participation Rate," Working Papers wp385, University of Michigan, Michigan Retirement Research Center.
    6. David H. Autor & Mark Duggan & Kyle Greenberg & David S. Lyle, 2016. "The Impact of Disability Benefits on Labor Supply: Evidence from the VA's Disability Compensation Program," American Economic Journal: Applied Economics, American Economic Association, vol. 8(3), pages 31-68, July.
    7. Michael S. Kofoed & Wyatt J. Frasier, 2019. "[Job] Locked and [Un]loaded: The Effect of the Affordable Care Act Dependency Mandate on Reenlistment in the U.S. Army," Upjohn Working Papers 19-300, W.E. Upjohn Institute for Employment Research.
    8. Adam Korolczuk, 2015. "Amerykańska polityka wobec rynku pracy a weterani pokolenia 9/11," Studia z Polityki Publicznej / Public Policy Studies, Warsaw School of Economics, vol. 2(4), pages 1-30.
    9. Michael Levere, "undated". "The Labor Market Consequences of Receiving Disability Benefits During Childhood," Mathematica Policy Research Reports 4a4b6e2d970c4e669ba5f4126, Mathematica Policy Research.

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    More about this item

    JEL classification:

    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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