Compulsory military service, civilian wages, and retirement decision

Hyunjoon Lim

International Journal of Manpower, 2018, vol. 39, issue 1, 106-132

Abstract: Purpose - The purpose of this paper is to evaluate the effect of veteran status on civilian wages and on retirement age through employing individual-level data. Design/methodology/approach - Instrumental variable (IV) estimation specifications show that, contrary to public perception, veteran status has a statistically significant positive impact on an individual’s civilian wage and thus helps him retire earlier than his non-veteran counterpart. Findings - Moreover, the wage premium effect largely holds for less-educated men; however, for highly educated men, military service has adverse effects on their subsequent wages, and thus, on their retirement age. In line with this result, the effects of veteran status on retirement age largely hold for the relatively less-educated group. Originality/value - This is the first finding to shed light on the link between veteran status and the decision to retire. This work is also first attempt to explore relationship between compulsory military service and subsequent civilian labor market performance, using the Korean individual-level data via relevant IV estimation methodology.

Keywords: Civilian wage premium; Mandatory military service; Retirement decision; Wooldridge’s three-step estimation; J24; J26; J31 (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:eme:ijmpps:ijm-04-2016-0094

DOI: 10.1108/IJM-04-2016-0094

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