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Activation imposes a variety of costs on reservists. Among those costs is a potential decline in earnings during the period of activation. In this study, RAND researchers compute how earnings change when a reservist is activated using administrative data on military and civilian earnings obtained from the Department of Defense (DoD) and the Social Security Administration (SSA). The study employs a comprehensive measure of annual earnings and covers the experiences of virtually all reservists activated in support of the Global War on Terrorism through 2003. Contrary to conventional wisdom and DoD survey evidence, the RAND study indicates that, on average, the earnings of reservists increase substantially when activated. Moreover, earnings gains increase with length of active duty service. Some reservists do experience an earnings loss when activated, but the probability of experiencing an earnings loss declines with length of active duty service. Even so, these large earnings gains may be insufficient to compensate reservists for the hardship of active duty.

The research described in this report was prepared for the Office of the Secretary of Defense (OSD). The research was conducted in the RAND National Defense Research Institute, a federally funded research and development center sponsored by the OSD, the Joint Staff, the Unified Combatant Commands, the Department of the Navy, the Marine Corps, the defense agencies, and the defense Intelligence Community.

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