Effect of the Variable Reenlistment Bonus on Reenlistment Rates

Empirical Results for FY 1971

by John H. Enns

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A preliminary study affirming that the VRB is an effective policy tool for increasing first-term reenlistment rates. In all three regression models of supply, for the Army, Navy, and Air Force, the estimated coefficient measuring the marginal response of the reenlistment rate to bonus awards proved positive, substantial, and statistically significant. There is some evidence that subgroups of the first-term enlisted force (classified by education, mental ability, and race) differ in their response to bonus awards, and that the response varies across DOD occupational groups. The results of this study are tentative in nature. The data used pertain to a single year, FY 1971; because reenlistment behavior during this year was affected by the Vietnam conflict and the draft, future work with additional year group data is necessary. (See also R-1519.)

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