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Examining the Distributional Effects of Military Service on Earnings: A Test of Initial Dominance

Author

Listed:
  • 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.

Suggested Citation

  • Christopher J. Bennett & Ricardas Zitikis, 2011. "Examining the Distributional Effects of Military Service on Earnings: A Test of Initial Dominance," Vanderbilt University Department of Economics Working Papers 1111, Vanderbilt University Department of Economics.
  • Handle: RePEc:van:wpaper:1111
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    References listed on IDEAS

    as
    1. Joshua D. Angrist & Alan B. Krueger, 1991. "Estimating the Payoff to Schooling Using the Vietnam-era Draft Lottery," Working Papers 670, Princeton University, Department of Economics, Industrial Relations Section..
    2. Donald W. K. Andrews & Xiaoxia Shi, 2013. "Inference Based on Conditional Moment Inequalities," Econometrica, Econometric Society, vol. 81(2), pages 609-666, March.
    3. J.J. Heckman & E.E. Leamer (ed.), 2007. "Handbook of Econometrics," Handbook of Econometrics, Elsevier, edition 1, volume 6, number 6a.
    4. Saraswata Chaudhuri & Elaina Rose, 2009. "Estimating the Veteran Effect with Endogenous Schooling when Instruments are Potentially Weak," Working Papers UWEC-2009-07, University of Washington, Department of Economics.
    5. Imbens, Guido W & Angrist, Joshua D, 1994. "Identification and Estimation of Local Average Treatment Effects," Econometrica, Econometric Society, vol. 62(2), pages 467-475, March.
    6. James J. Heckman & Vytlacil, Edward J., 2007. "Econometric Evaluation of Social Programs, Part I: Causal Models, Structural Models and Econometric Policy Evaluation," Handbook of Econometrics,in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 6, chapter 70 Elsevier.
    7. Angrist, Joshua D, 1990. "Lifetime Earnings and the Vietnam Era Draft Lottery: Evidence from Social Security Administrative Records: Errata," American Economic Review, American Economic Association, vol. 80(5), pages 1284-1286, December.
    8. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-766, May.
    9. Abadie A., 2002. "Bootstrap Tests for Distributional Treatment Effects in Instrumental Variable Models," Journal of the American Statistical Association, American Statistical Association, vol. 97, pages 284-292, March.
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    11. 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).
    12. 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 313-336, June.
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    More about this item

    Keywords

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

    JEL classification:

    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General

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