SMU Economics and Statistics Working Paper Series, No. 12-2005
Abstract
There has been much recent interest in the e¤ects of pre and non-market skills on future labor market outcomes. This paper examines one such e¤ect: the e¤ect on future wages of military leadership experience among Vietnam generationAmerican men. We study rank, not just veteran status. We argue that rank is a good measure of pre-market leadership skills because of the clear military hierarchy and the primarily youth experience of Vietnam service. Two sources of selection bias are accounted for: non-random military entry and eventual rank attained. We apply a modi\u85ed 2-stage parametric sample selection method. The rank premia on future wages are estimated using the parametric selection corrections and a propensity score matching with two indices. We \u85nd evidence of a leadership premium, but not a veteranspremium. It is the rank that matters. If one joins the military believing that military service commands a future wage premium, he had better become an NCO or an o ¢ cer. JEL: J24, J10
