THE SUPPLY PRICE OF COMMITMENT: EVIDENCE FROM THE AIR FORCE ENLISTMENT BONUS PROGRAM

Curtis Simon and John Warner

Defence and Peace Economics, 2009, vol. 20, issue 4, 269-286

Abstract: In fiscal year 1999, the US Air Force introduced a bonus program designed to encourage longer enlistment terms. This regime shift provides a unique opportunity to estimate the elasticity of labor supply at a new margin: the length of the employment contract. A $5000 bonus differential is estimated to increase the probability that a recruit will choose a 6-year enlistment over a 4-year enlistment by 30 percentage points. The program is found to be cost-effective relative to other policies to increase man-years.

Keywords: Enlistment bonus; Term of enlistment (search for similar items in EconPapers)
Date: 2009
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DOI: 10.1080/10242690802221866

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