IDEAS home Printed from https://ideas.repec.org/p/upj/weupjo/15-226.html
   My bibliography  Save this paper

Military Retention Incentives: Evidence from the Air Force Selective Reenlistment Bonus

Author

Listed:
  • Justin Joffrion

    (U.S. Air Force Academy)

  • Nathan Wozny

    (U.S. Air Force Academy)

Abstract

The limited lateral entry and rigid pay structure for U.S. military personnel present challenges in retaining skilled individuals who have attractive options in the civilian labor market. One tool the services use to address this challenge is the Selective Reenlistment Bonus (SRB), which offers eligible personnel with particular skills a substantial cash bonus upon reenlistment. However, the sequential nature of the bonus offer and reenlistment process limits the ability to adjust manpower quickly, raising interest in research that estimates the effect of the SRB on retention. While this literature has acknowledged challenges including potential endogeneity of bonus levels, attrition, and reenlistment eligibility, many studies do not address these concerns adequately. This paper uses a comprehensive panel data set on Air Force enlisted personnel to estimate the effect of the SRB on retention rates. We exploit variation in bonus levels within skill groups, control for civilian labor market conditions, and model reenlistment eligibility to avoid common assumptions that lead to biased impact estimates. We find substantial heterogeneity in the effect of the bonus, with the largest effects on first-term service members and those whose skills have not historically received a substantial bonus. We also find evidence that the bonus affects the timing of reenlistment decisions in addition to their frequency.

Suggested Citation

  • Justin Joffrion & Nathan Wozny, 2015. "Military Retention Incentives: Evidence from the Air Force Selective Reenlistment Bonus," Upjohn Working Papers 15-226, W.E. Upjohn Institute for Employment Research.
    • Handle: RePEc:upj:weupjo:15-226
    as

    Download full text from publisher

    File URL: http://research.upjohn.org/cgi/viewcontent.cgi?article=1243&context=up_workingpapers
    Download Restriction: This material is copyrighted. Permission is required to reproduce any or all parts.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Carrell, Scott E., 2007. "The national internal labor market encounters the local labor market: Effects on employee retention," Labour Economics, Elsevier, vol. 14(5), pages 774-787, October.
    2. Colleen Flaherty Manchester, 2012. "General Human Capital and Employee Mobility: How Tuition Reimbursement Increases Retention through Sorting and Participation," ILR Review, Cornell University, ILR School, vol. 65(4), pages 951-974, October.
    3. Charles T. Clotfelter & Elizabeth J. Glennie & Helen F. Ladd & Jacob L. Vigdor, 2008. "Teacher Bonuses and Teacher Retention in Low-Performing Schools," Public Finance Review, , vol. 36(1), pages 63-87, January.
    4. Curtis Simon & John Warner, 2010. "Army Re-Enlistment During Oif/Oef: Bonuses, Deployment, And Stop-Loss," Defence and Peace Economics, Taylor & Francis Journals, vol. 21(5-6), pages 507-527.
    5. Jaewhan Kim & Peter Philips, 2010. "Health Insurance and Worker Retention in the Construction Industry," Journal of Labor Research, Springer, vol. 31(1), pages 20-38, March.
    6. Blakemore, Arthur E & Low, Stuart A & Ormiston, Michael B, 1987. "Employment Bonuses and Labor Turnover," Journal of Labor Economics, University of Chicago Press, vol. 5(4), pages 124-135, October.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Martin, Stephanie M., 2010. "The determinants of school district salary incentives: An empirical analysis of, where and why," Economics of Education Review, Elsevier, vol. 29(6), pages 1143-1153, December.
    2. Chol-Jung Park & Soo-Yong Kim & Minh V. Nguyen, 2021. "Fuzzy TOPSIS Application to Rank Determinants of Employee Retention in Construction Companies: South Korean Case," Sustainability, MDPI, vol. 13(11), pages 1-16, May.
    3. Victor Y. Haines III & Patrice Jalette & Karine Larose, 2010. "The Influence of Human Resource Management Practices on Employee Voluntary Turnover Rates in the Canadian Non Governmental Sector," ILR Review, Cornell University, ILR School, vol. 63(2), pages 228-246, January.
    4. Bryson, Alex & Clark, Andrew E. & Freeman, Richard B. & Green, Colin P., 2016. "Share capitalism and worker wellbeing," Labour Economics, Elsevier, vol. 42(C), pages 151-158.
    5. Lawrence Kaufmann, 1997. "A Model of Spillovers Through Labor Recruitment," International Economic Journal, Taylor & Francis Journals, vol. 11(3), pages 13-33.
    6. Chute, Benjamin W. & Wunnava, Phanindra V., 2015. "Is There a Link Between Employer-Provided Health Insurance and Job Mobility? Evidence from Recent Micro Data," IZA Discussion Papers 8989, Institute of Labor Economics (IZA).
    7. Renaud Bellais & Martial Foucault & Jean-Michel Oudot, 2014. "Économie de la défense," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01052607, HAL.
    8. Hui Liu & Jie Li & Hongyang Li & He Li & Peng Mao & Jingfeng Yuan, 2021. "Risk Perception and Coping Behavior of Construction Workers on Occupational Health Risks—A Case Study of Nanjing, China," IJERPH, MDPI, vol. 18(13), pages 1-25, July.
    9. William MacKenzie & Brian Klaas & John McClendon, 2012. "Information Use in Counter-Offer Decisions: An Examination of Factors that Influence Management Counter-Offer Decisions," Journal of Labor Research, Springer, vol. 33(3), pages 370-387, September.
    10. Jens Mohrenweiser & Thomas Zwick & Uschi Backes‐Gellner, 2019. "Poaching and Firm‐Sponsored Training," British Journal of Industrial Relations, London School of Economics, vol. 57(1), pages 143-181, March.
    11. Scott Carrell & Jonathan Zinman, 2014. "In Harm's Way? Payday Loan Access and Military Personnel Performance," The Review of Financial Studies, Society for Financial Studies, vol. 27(9), pages 2805-2840.
    12. Daniel Dietz & Thomas Zwick, 2016. "The retention effect of training – portability, visibility, and credibility," Economics of Education Working Paper Series 0113, University of Zurich, Department of Business Administration (IBW).
    13. Bradley T. Heim & Ithai Z. Lurie, 2015. "The Impact of Health Reform on Job Mobility: Evidence from Massachusetts," American Journal of Health Economics, MIT Press, vol. 1(3), pages 374-398, Summer.
    14. Falch, Torberg & Johansen, Kåre & Strøm, Bjarne, 2009. "Teacher shortages and the business cycle," Labour Economics, Elsevier, vol. 16(6), pages 648-658, December.
    15. Cory Koedel & Jiaxi Li, 2016. "The Efficiency Implications Of Using Proportional Evaluations To Shape The Teaching Workforce," Contemporary Economic Policy, Western Economic Association International, vol. 34(1), pages 47-62, January.
    16. Ekinci, Emre, 2019. "Discretionary bonuses and turnover," Labour Economics, Elsevier, vol. 60(C), pages 30-49.
    17. Tore Ellingsen & Eirik Gaard Kristiansen, 2022. "Fair and Square: A Retention Model of Managerial Compensation," Management Science, INFORMS, vol. 68(5), pages 3604-3624, May.
    18. Campbell, Benjamin A., 2003. "Local Labor Market Conditions and Stock Options Incidence: A Study of the Information Technology Sector," Institute for Research on Labor and Employment, Working Paper Series qt7266d0q3, Institute of Industrial Relations, UC Berkeley.
    19. Daniel Aaronson & Katherine Meckel, 2009. "How will baby boomer retirements affect teacher labor markets?," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 33(Q IV), pages 2-15.
    20. Gentile, Elisabetta & Imberman, Scott A., 2012. "Dressed for success? The effect of school uniforms on student achievement and behavior," Journal of Urban Economics, Elsevier, vol. 71(1), pages 1-17.

    More about this item

    Keywords

    Selective reenlistment bonus; Retention; Reenlistment; Timing effect; Labor supply;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
    • J46 - Labor and Demographic Economics - - Particular Labor Markets - - - Informal Labor Market

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:upj:weupjo:15-226. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/upjohus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.