Jan 1, 2002
Between January 1992 and October 1995, the Department of Defense offered a voluntary separation incentive to mid-career personnel to induce them to leave service as a means of facilitating the defense drawdown. This incentive, the VSI/SSB (Voluntary Separation Incentive/Special Separation Benefit) program, was offered to those with specific combinations of occupation, rank, and years of service (YOS). The specific eligibility criteria were determined by the individual services. Two key questions for policymakers concerned about the success of this program are (1) Did the program induce substantial separations (over and above what would normally occur)? and (2) Did the program induce more low-quality personnel to leave than high-quality ones? Answers about the success of the program may also have broader interest. As shown by Asch and Warner (1994b), a voluntary-separation-pay program may play an important role in an alternative to the current military retirement system. Therefore, answers about the efficacy of the VSI/SSB program can give some insights into how such an alternative system might work. In this report, the authors address these questions using Defense Manpower Data Center data on Army enlisted personnel.