Report
Reserve Participation and Cost Under a New Approach to Reserve Compensation
Jun 28, 2012
Analysis of Financial Support to the Surviving Spouses and Children of Casualties in the Iraq and Afghanistan Wars
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Research Questions
- How have the deaths of service members during the wars in Iraq and Afghanistan affected the subsequent labor market earnings of their surviving spouses?
- Do survivor benefits provided by the Department of Defense (DoD), the Department of Veterans Affairs (VA), and the Social Security Administration (SSA) compensate for lost household earnings?
This study examines how the deaths of service members during the wars in Iraq and Afghanistan have affected the subsequent labor market earnings of their surviving spouses and the extent to which survivor benefits provided by the Department of Defense, the Department of Veterans Affairs, and the Social Security Administration compensate for lost household earnings. It also assesses the extent to which payments that surviving spouses and children receive compensate for earnings losses attributable to combat deaths. The labor market earnings of households experiencing a combat death in the years following deployment are compared with those of deployed but uninjured service-member households. Because the risk of combat death is likely to be correlated with characteristics of service members that could themselves affect household labor market outcomes (e.g., pay grade, military occupation, risk-taking behavior), the study controlled for a rich array of individual-level characteristics, including labor market outcomes for both service members and spouses prior to deployment. This approach includes potentially unobserved factors that are unique to specific households and fixed over time and increases the likelihood that the results capture the causal effect of combat death on household earnings.
Key Findings
Household Labor Market Earnings Decline Substantially in the Years Following the Combat Death of a Member of the Household
- Household earnings losses following the combat death of a household member are economically large and persistent over time.
- Most (approximately 90 percent) of the losses can be attributed to the loss of the deceased service member's own earnings, with the remainder attributable to declines in spousal earnings.
- Recurrent benefits replace a substantial fraction of earnings losses, but meaningful income losses remain after taking them into account.
- The combined value of recurrent and lump-sum benefits can fully offset household earnings losses for 20 years or more.
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Table of Contents
Chapter One
Introduction
Chapter Two
Data Used in the Study
Chapter Three
Empirical Model
Chapter Four
Results
Chapter Five
Discussion
Chapter Six
Conclusions
Research conducted by
The research described in this report was prepared for the Office of the Secretary of Defense (OSD). The research was conducted within the RAND National Defense Research Institute, a federally funded research and development center sponsored by OSD, the Joint Staff, the Unified Combatant Commands, the Navy, the Marine Corps, the defense agencies, and the defense Intelligence Community.
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