Academic Literature

US – A study on the effects of military service on earnings and education

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.

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Key Findings

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.

Chosen excerpts by Job Market Monitor. Read the whole story at Effects of Military Service on Earnings and Education Revisited: Variation by Service Duration, Occupation, and Civilian Unemployment | RAND.

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