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Some Aspects of Military Service Affect Earnings More Than Other Aspects Do

• For all year-of-service values, there is a large return to being in the military. This premium falls sharply upon separation, but the estimated returns become positive again and trend upward with time.
• For all occupational categories, military service is associated with sizable long-run earnings gains. Veterans who enter occupations in health care or communications or intelligence have larger gains than veterans who go into combat arms.
• The degree to which skills are transferable to the civilian labor market varies by occupation.

Effects of Military Service on Education Do Not Appear Significant

• Service members significantly delay college enrollment but are as likely as similar nonenlistees to enroll at some point.
• There is very little difference in college-enrollment and degree-attainment patterns by military occupational specialty except in the health care field.

Economic Conditions at the Time of Separation Affect Earnings

• Veterans substitute military income for civilian income when they separate in times of relatively high unemployment. However, men's total earnings decrease in response to high rates of unemployment at the end of their first contract, and these negative effects last up to seven years.

Partnership for Youth Success Does Not Affect Earnings, College Enrollment, or Degree Attainment

• In the case of this program, providing individuals with a promise of an interview upon separation from the military was not sufficient to increase earnings.

The overriding objective of U.S. military compensation policy is to attract and retain the force necessary to meet the nation's national security objectives. Whether and how military service affects earnings and an individual's likelihood of completing college (one determinant of future earnings) has implications for military policies related to compensation, recruiting, and retention. Estimating the effect of military service is complicated by the fact that veterans are likely to differ from nonveterans in ways that are correlated with subsequent economic outcomes but are not observable to the researcher. This report builds on earlier work to understand how military service affects earnings, especially how these effects differ by the number of years of service and their military occupational specialties while serving. The authors also sought to understand how external factors and policies affect these impacts. To do this, they examined how economic conditions in the civilian labor market when individuals exit active duty affect postservice earnings, and they studied the effect on earnings of an Army recruiting program, Partnership for Youth Success, designed to promote enlistment but with the potential to ease the financial transition from military to civilian life.

• Chapter One

  Introduction

• Chapter Two

  Data Sources

• Chapter Three

  Analysis of the Effect of Military Service on Earnings

• Chapter Four

  Analysis of the Effect of Military Service on Education

• Chapter Five

  Analysis of the Effect of Economic Conditions at the Time of Separation

• Chapter Six

  Analysis of the Effect of the Army Partnership for Youth Success Program

• Chapter Seven

  Summary and Conclusions

• Appendix

  Supplemental Tables