published in: Journal of Human Resources, 2003, 38 (3), 673-700
A key concern in estimating the effect of military service on civilian earnings is bias from
unmeasured differences between military veterans and nonveterans. The effects of activeduty
service are estimated using the 1986 and 1992 Reserve Components Surveys, which
permit a matched comparison between reservists who are veterans and reservists without
active-duty service. Because military entrance requirements are identical for the reserves and
active duty, estimated treatment effects embody control for selection by the military and
selection by workers for a form of military service. Results are presented for officers and
enlisted personnel and by race and era of service. The average impact of active-duty service
on civilian earnings is 3 percent among the reservist population, but this average reflects
treatment effects of essentially zero for enlisted personnel and 10 percent for officers.
Among white enlisted personnel, veteran effects are negative but small. Treatment effects for
African-American veterans average about 5 percent. Vietnam-era white draftees are found to
have suffered an approximate 5 percent wage penalty and volunteers little penalty, but
estimates from the reservist sample are likely to understate negative effects from Vietnamera
service.
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