Compulsory military service, civilian wages, and retirement decision: Evidence from Korean individual-level data
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.
Keywords
Acknowledgements
The author is grateful to Yongsung Chang, his doctoral thesis committee members and seminar participants at the Korea-American Economic Association for their helpful comments and suggestions. This paper is an improved version of the third chapter of the author's PhD dissertation at Yonsei University.
Citation
Lim, H. (2018), "Compulsory military service, civilian wages, and retirement decision: Evidence from Korean individual-level data", International Journal of Manpower, Vol. 39 No. 1, pp. 106-132. https://doi.org/10.1108/IJM-04-2016-0094
Publisher
:Emerald Publishing Limited
Copyright © 2018, Emerald Publishing Limited