Improving the Labor Market Outcomes of US Veterans: The Long-Run Effect of the Transition Assistance Program

ABSTRACT

The success of military recruiting depends largely on the potential consequences of military services. This study examines how military service affects labor market outcomes of veterans. Specifically, I focus on how the Transition Assistance Program (TAP), a career assistance program, help military personnel transition to the civilian labor market. To identify the effects of TAP, I exploit variation in program accessibility generated by its initial rollout process. Using data from the Current Population Survey, I find that TAP improves the labor market outcomes of veterans, measured approximately ten years after separation. Specifically, it leads a significant increase in labor force participation. One possible mechanism is that TAP encourages the use of the GI Bill, a program that provides financial assistance to attend institutions of higher education.

KEYWORDS:

• Transition Assistance Program (TAP)
• labor supply
• military recruiting

Disclosure statement

No potential conflict of interest was reported by the author.

Data availability statement

The data that support the findings of this study are openly available at http://www.nber.org/cps/data.html

Notes

1. Occupational outlook handbook. Bureau of Labor Statistics.

2. Veterans Education and Benefits Expansion Act of 2001 extends the period from 6 months to 1 year for separatees and from 1 year to 2 years for retirees.

3. One caveat with the data is that the questions regarding TAP participation and offering are only asked to veterans separated from the military after 1991. For 1990, when the TAP pilot program was in place, participants may be miscoded as nonparticipants. Such measurement error would lead to attenuation bias. However, the miscoded population is likely small. CPS from 1995 to 1999 also asked the question regarding TAP participation to veterans discharged prior to 1991. According to the responses, the TAP participation rate in 1990 was 0.52%. Additionally, conditional on offering, the take-up rate of TAP in 1991 was around 40%. If the take-up rate in 1990 was the same as in 1991, four observations from the analysis sample are potentially miscoded as not offered TAP in 1990.

4. According to the 2004 demographic report of the military community, 49.7% of married female active duty members were married to military members.

5. The results are robust to an IV-probit specification (Table A1).

6. To account for heteroscedasticity, standard errors are clustered by state of residence and year of discharge. The statistical significance of the estimates is not appreciably different if using White-Hubert robust standard errors. Standard errors calculated using other methods are presented in Table 4 for comparison, and those for other outcomes are available upon request.

7. Source: Census Bureau historical income estimates using the CPS.

8. According to the National Survey of Veterans (2010), veterans being unaware of benefits or finding application processes difficult are major barriers for benefit use. Notably, a large share of veterans served on the active duty between 1975 and 1990 report that they have little understanding of VA benefits. The shares that indicated ‘not at all’ to questions regarding how much they understood the benefits are: 40.7% for health care benefit; 42.6% for education and training benefits; 58.6% for life insurance benefits; and 32.1% for home loan guaranty benefits.