More than one-in-three men aged 55 and older in the U.S. is a veteran of military service. Previous research has investigated the extent to which labor market outcomes among veterans differ from those of non-veterans while controlling for other factors such as educational attainment and age. Surprisingly little research has explored the effect of government programs designed exclusively for veterans on their labor market outcomes.
One of the largest programs for veterans is the Disability Compensation (DC) program, which is administered by the U.S. Department of Veterans Affairs (VA). This program pays benefits to veterans with medical conditions that were caused by or aggravated during their military service. From 1950 to 2000, the fraction of veterans receiving DC benefits was relatively stable, fluctuating between 8 and 10 percent. A 2001 policy change expanded the set of conditions with which Vietnam veterans could qualify for the program. Subsequent policy changes expanded the eligibility criteria for other veterans as well. Partly because of these changes, the fraction of veterans receiving DC benefits doubled from 9 percent in 2001 to 18 percent in 2014 while the average inflation-adjusted benefit paid per recipient increased by 50 percent.
This project will investigate the effect of the DC program on older veterans’ labor market outcomes and how these effects vary with respect to educational attainment and other characteristics. We will also explore how the program influences enrollment in other government programs (e.g. Social Security) along with spousal labor market outcomes. This research will shed light on the effect of this large and rapidly growing government program on the labor market.