The heterogeneous economic returns to military service: Evidence from the Wisconsin longitudinal study

Abstract

This article documents heterogeneous economic returns to military service that vary with the individual propensity to serve, even within a relatively privileged sample of mostly white high school graduates. Using a rich set of covariates from the Wisconsin Longitudinal Study, I estimate propensity scores for male respondents’ likelihood of voluntary military enlistment or involuntary draft conscription. Then, I use recently developed HLM-based methods for causal inference to analyze systematic variation in veteran status’ effect on later earnings as a function of these propensity scores. Among individuals with low propensities for military service—but not among others—veterans suffer large wage penalties. While this pattern applies to both voluntary enlisters and draftees, the timing of the wage penalty differs by mode of military entry. These effects are shown to correlate strongly with differences in educational attainment between veterans and nonveterans with low propensities for military service, suggesting the greater value of opportunities for human capital accumulation in the civilian sphere.