Get access

EDUCATIONAL BENEFITS AND MILITARY SERVICE: AN ANALYSIS OF ENLISTMENT, REENLISTMENT, AND VETERANS' BENEFIT USAGE 1991–2005*

Authors

  • CURTIS J. SIMON,

    1. SIMON: Associate Professor, Department of Economics, Clemson University, Clemson, SC 29634-1309. Phone 864-656-3966, Fax 864-656-4192, E-mail cjsmn@clemson.edu Clemson University.
    Search for more papers by this author
  • SEBASTIAN NEGRUSA,

    1. NEGRUSA: Associate Economist, RAND Corporation. Phone 703-413-1100, Fax 703-414-4725, E-mail snegrusa@rand.org RAND Corporation.
    Search for more papers by this author
  • JOHN T. WARNER

    1. WARNER:Professor, Department of Economics, 222 Sirrine Hall, Clemson University, Clemson, SC 29634-1309. Phone 864-656-3967, Fax 864-656-4192, E-mail jtwarne@clemson.edu
    Search for more papers by this author
    • *

      This research was sponsored by the Accession Policy Directorate of the Office of the Undersecretary of Defense for Personnel and Readiness under contract number HQ0034-06-C-1026. We thank the Director of Accession Policy, Curtis Gilroy, for his support and encouragement of our work. We also thank Heidi Golding and other participants at the 2006 Western Economic Association meetings for comments on an early version of this paper and Alex Gelber, Martin Feldstein, and other participants at the summer 2008 NBER Program on the Economics of National Security for comments on a more recent version. The views and opinions expressed herein are those of the authors and do not represent any official policy position of the Department of Defense. They alone are responsible for any remaining errors.

Errata

This article is corrected by:

  1. Errata: ERRATUM Volume 49, Issue 1, 310, Article first published online: 10 January 2011

Abstract

Montgomery GI Bill (MGIB) educational benefits are a prime recruiting tool in today's all-volunteer military. This paper studies the effects of changes in education benefits using data of the period 1990–2005. Higher benefits lead to higher separation due to both pure incentive effects and by attracting more college-oriented youth into military service. We deal with potential selection issues by distinguishing between anticipated and unanticipated benefit changes. Higher education benefits are associated with higher separation from the Army and Air Force, but not the other services. A $10,000 increase in MGIB benefits is estimated to increase usage by about 5 percentage points, but the duration of usage is estimated to be insensitive to benefit levels. (JEL H52, I21, J24)

Ancillary