Veteran status as a screening device

by Dennis N. De Tray

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Wage studies in which such individual characteristics as age and education are controlled often find that military veterans earn more than nonveterans in the civilian sector. One explanation for this "veteran premium" is that civilian employers use service in the military to distinguish between more productive and less productive workers. This paper offers a test of veteran status as a screening device using the 1960 and 1970 Public Use Samples of the U.S. Census. The results of the test support the role of veteran status as a screening device, but also suggest that other factors such as accumulation of human capital contribute to the premium that civilian employers pay veterans.

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