Long-Term Economic Consequences of Vietnam-Era Conscription: Schooling, Experience and Earnings

56 Pages Posted: 11 Aug 2008

See all articles by Joshua D. Angrist

Joshua D. Angrist

Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Stacey Chen

University of Tokyo, Graduate School of Public Policy

Abstract

Military service reduces civilian labor market experience but subsidizes higher education through the GI Bill. Both of these channels are likely to affect civilian earnings. New estimates of the effects of military service using Vietnam-era draft-lottery instruments show post-service earnings effects close to zero in 2000, in contrast with earlier results showing substantial earnings losses for white Vietnam veterans in the 1970s and 1980s. The recent estimates also point to a marked increase in post-secondary schooling that appears to be attributable to the Vietnam-era GI Bill. Seen through the lens of a Mincer wage equation, the wage effects observed in 2000 data can be explained by a flattening of the experience profile in middle age and a modest return to the additional schooling funded by the GI Bill. In particular, IV estimates of the returns to GI Bill-funded schooling are well below OLS estimates. Wage equations that allow for nonlinearities in the returns to schooling and a possible negative effect of military service on health, leave the main findings unchanged.

Keywords: veterans, returns to schooling, instrumental variables

JEL Classification: J31, I22, I28, H56

Suggested Citation

Angrist, Joshua and Chen, Stacey, Long-Term Economic Consequences of Vietnam-Era Conscription: Schooling, Experience and Earnings. IZA Discussion Paper No. 3628, Available at SSRN: https://ssrn.com/abstract=1214917 or http://dx.doi.org/10.2139/ssrn.1214917

Joshua Angrist (Contact Author)

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Stacey Chen

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