Reenlistment Bonuses and First-Term Retention

by John H. Enns

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An extension of the methodology and data used in an earlier Rand study (reported in R-1502) which developed and estimated a statistical model of reenlistment supply for the Army, Navy, and Air Force for a single year, FY 1971. The present study analyzes four years of reenlistment data (FY 1971-FY 1974) using two regression models to generate an estimate of a four-year average bonus response. It is concluded that (1) selective reenlistment bonuses have the desired positive effect on first-term reenlistment rates; (2) the bonus elasticity under current bonus policy is likely to be about 2.0; (3) differences in bonus response between service branches are not large enough to require separate bonus management policies for each service; (4) the different bonus multiples each produce about the same per dollar effect; and (5) there is no evidence of differences between broadly defined occupational groups in bonus response.

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