Discussion and Implications

\label{discussion-and-implications}
We find that for young veterans from the draft era, entering the civilian labor market during a period of relatively high unemployment has negative and long-term effects on these veterans’ outcomes. In particular, we find statistically significant, negative, and substantive effects on earnings for a long period of time. We also find evidence that veterans might react by delaying retirement or potentially even un-retiring in old age. It is worth noting that these findings hold regardless of the fact that veterans who enter the labor market in weak conditions obtain most post-secondary education than other veterans. Finally, veterans who come to the civilian labor market in periods of high unemployment are less likely than other veterans to marry or to live in coupled households.
Our results hinge on comparing two groups of veterans—those who enter the labor market in relatively positive economic conditions with lower rates of unemployment and those who enter in less positive conditions with higher rates of unemployment. In each case, we select veterans who served for a relatively brief period of time; many of these veterans were drafted (or draft-induced volunteers who enlisted to pick the Service they preferred) and thus the timing of their entry into the labor market was controlled not by their preferences but by the timing of world events.
Our results suggest that the negative impacts of entering the labor market during an economic downturn are both substantive and very long-lasting. While providing opportunities for additional post-secondary education or training are likely to be helpful to young workers who, by timing of birth, enter the labor market during economic downturns, our results suggest that such programs may not make up for the total impacts. Indeed, our results suggest that the effects are likely to remain discernable up to the point of retirement. Our sample of veterans appear, eventually, to recover from the initial labor market conditions they faced—but some may only complete that recovery by working longer as they approach retirement age. While today’s younger workers face different retirement constraints (in terms of the age at which they will be eligible to collect Social Security), our results suggest that those who entered the labor market during the Great Recession may respond to the initial labor market conditions throughout their careers.
This finding should be of interest to policy makers working to help smooth current active duty military personnel’s transition into the civilian labor force. Similar effects could exist for other groups studied before (high school graduates, college graduates, etc.). Our findings have implications for today’s young workers, many of whom entered the labor market during periods of historically high unemployment rates. They could also have implications for the future costs of Social Security.