Essays in Economics Using Military-Induced Variation to Study Human Capital Development, Excess Sensitivity to Income, and Labor Market Decisions

This dissertation contains three essays that leverage the detailed nature of military data along with natural experiments found within the military environment to investigate questions that pertain to the manning and welfare of our modern military as well as inform areas of public and labor economics.

The first chapter investigates the effect of job exit timing on the educational attainment of workers. A successful job transition often hinges on a worker's access to education and re-training. Yet, many obstacles outside the traditional education investment model potentially prevent this sizable non-traditional student population from attending college. I use a two-stage least-squares approach to investigate a previously unexplored dimension - the effect of job exit timing on educational attainment. Using detailed military records and GI Bill benefits data, I find that exiting the military with a seven months wait before a traditional semester start date reduces the likelihood that veterans use their GI Bill benefits by 8 percent and reduces their overall educational attainment by two months as compared to veterans who exit and experience no wait time. The effect of wait time is even larger in the first year of a veteran's transition from the military and is more pronounced among those in the middle third of the AFQT score distribution.

The second chapter explores the sensitivity of charitable giving to the realization of large anticipated income changes. How charitable giving responds to these types of shocks has proved difficult to identify. Furthermore, decades of empirical research on the permanent income hypothesis provide no clear answer for the presence of excess sensitivity to income. Using information on soldier's charitable giving through the Combined Federal Campaign and variation in military income generated by bonus size and payment timing, I estimate the sensitivity of charitable giving to income changes. My findings suggest that soldiers are 5 to 10 percent more likely to contribute to charity if they receive a large anticipated income shock during the charity campaign. I also find that the excess sensitivity diminishes with age and previous bonus exposure, suggesting that experience with consumption smoothing plays an important role.

The third chapter examines the impact of military casualties and their salience on both the type and number of enlistments that occur in the following months. For over 40 years, the U.S. has relied on an all-volunteer military to defend its national interests. However, until the War on Terror, the sustainability of a volunteer army during war has remained untested. I exploit the timing and geographic variation of war casualties to estimate the impact of national and local war casualties on the enlistment decisions of new recruits. Using detailed data on military enlistments and casualties sustained during the War on Terror, I find a local casualty decrease the number of enlistments at the local entry station by .6 percent while a national level casualty decreases the number of enlistments by only .03 percent. More importantly, I find, conditional on enlisting, that local casualties also reduce enlistments into riskier military jobs and reduce the length of initial contracts more strongly than national casualties - presenting additional manning challenges for the military.