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Compulsory military service, civilian wages, and retirement decision

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  • Hyunjoon Lim

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.

Suggested Citation

  • Hyunjoon Lim, 2018. "Compulsory military service, civilian wages, and retirement decision," International Journal of Manpower, Emerald Group Publishing Limited, vol. 39(1), pages 106-132, April.
    • Handle: RePEc:eme:ijmpps:ijm-04-2016-0094
    DOI: 10.1108/IJM-04-2016-0094
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    More about this item

    Keywords

    Civilian wage premium; Mandatory military service; Retirement decision; Wooldridge’s three-step estimation; J24; J26; J31;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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