Large Public Programs and Labor Outcomes: Evidence from the Military
Sunday, Jan. 3, 2021 10:00 AM - 12:00 PM (EST)
- Chair: Bruce Sacerdote, Dartmouth College
How Disability Benefits Affect Veteran Self-Employment
AbstractThe U.S. Department of Veterans Affairs’ Disability Compensation (DC) program provides disability benefits to nearly one in four U.S. military veterans and has annual expenditures of $77 Billion. We examine how the receipt of DC benefits affects the self-employment decisions of veterans, making use of variation in eligibility resulting from a 2001 policy change that increased access to the program for veterans who served with “boots on the ground” in the Vietnam theater but not for other veterans of that service era. We find that the policy-induced increase in program enrollment decreased labor force participation and induced a substantial increase in self-employment. The latter finding suggests that an exogenous increase in income allowed some older veterans to realize an ambition to start their own business or to retire gradually through self-employment. We next explore the characteristics of veteran business owners and the self-employment patterns of service-disabled veterans.
Army Service in the All-Volunteer Era
AbstractThe United States has relied exclusively on volunteers to serve in the military since July 1, 1973. Volunteers tend to come from lower income households, yet we know relatively little about whether enlistment improves their prospects. This paper links the universe of Army applicants between 1990 and 2011 to IRS data and exploits eligibility thresholds at the 31st and 50th percentile of the nationally representative Armed Forces Qualifying Test (AFQT) to estimate the long-term, dynamic effects of Army enlistment on earnings, employment, education, and disability. Our regression discontinuity estimates show that Army service increases cumulative earnings in the 15 years following Army application at both cutoffs. We also find that Army service increases college attendance, disability compensation, and marriage rates, with no cumulative effects on employment. Further, we find striking heterogeneity by race, with black servicemembers experiencing large long-term earnings gains.
- J0 - General
- I0 - General