Wage Growth in the Civilian Careers of Military Retirees

By David S. Loughran | Go to book overview

Chapter Three
ACCOUNTING FOR LOW RETIREE EARNINGS

How the data on relative retiree earnings presented in Chapter Two are interpreted depends critically on whether one believes the appropriate comparison is being made between civilians and retirees. For example, whether it is surprising that the wages of recent retirees lie 32 percent below mean civilian wages conditional on age, education, race, marital status, occupation, and geographic location depends upon whether this conditional mean of the civilian wage distribution is thought to be an appropriate reference point for retiree wages. It may be that, even conditional on these observed characteristics, differences in the abilities of military retirees and their civilian counterparts, and in the effort retirees and their counterparts expend in the civilian labor market, drive observed differences in civilian earnings.

This chapter explores a number of possible reasons why one might expect military retirees to earn relatively low earnings in their second careers. The discussion does not rely on formal tests, but rather presents an array of evidence using survey responses to a variety of subjective questions posed in the SRMP.


DO RETIREES THINK THEY EARN FAIR WAGES?

While formally controlling for unobserved differences in ability and effort is beyond the scope of this report, one can nevertheless make use of the answers to a number of subjective questions asked in the SRMP about the civilian labor market experiences of retirees to address this issue. One such question in the SRMP is as follows: Overall, how much has being a military retiree helped or hindered

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Wage Growth in the Civilian Careers of Military Retirees
Table of contents

Table of contents

  • Title Page *
  • Preface iii
  • Contents v
  • Figures vii
  • Tables ix
  • Summary xi
  • Acknowledgments xvii
  • Acronyms xix
  • Chapter One - Introduction 1
  • Chapter Two - Comparing Civilian and Retiree Wage Growth 7
  • Chapter Three - Accounting for Low Retiree Earnings 41
  • Chapter Four - Conclusions 53
  • Appendix - Derivation of Retiree Status from Census Data 55
  • Bibliography 57
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