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Long-Term Effects of Leaving Military Service in a Weak Economy
WP 2017-369
Italo A. Gutierrez and Jennie W. Wenger 

  • We compare short- and long-run outcomes for veterans from the draft era who entered the civilian labor market during periods of relatively low unemployment with outcomes of similar veterans who entered the civilian market during periods of higher unemployment.
  • Higher levels of unemployment are linked to a variety of negative outcomes, and the effects take years to dissipate.
  • Veterans who entered the civilian market in periods of high unemployment have lower earnings for more than a decade, have lower levels of prospective Social Security wealth, and appear to delay retirement (perhaps to compensate for the negative effects experienced early in their careers).
  • Veterans who began work during periods of high unemployment have higher levels of family instability in later decades. This could represent another measure of household well-being.
  • Our results suggest that young workers who entered the labor market during the Great Recession are likely to experience negative effects throughout the first phases of their career. Indeed, some of the effects could influence today’s young workers through retirement.
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