We also estimate the effects on labor force status for veterans between
the ages of 60 to 70. We fit the multinomial logistic model in equation
(6) below, where \(\text{Ag}e_{a,i}\) are a set of indicator variables
that take the value of 1 if the veteran is in age category \(a\), and
take the value of zero otherwise. We have grouped the ages between 60
and 70 in 10 categories: 60-61, 62-64, 65-66, 67-68, and 69-70. The
outcome variable \(Y_{i}\) contains 7 categories: works full-time, works
part-time, unemployed, partly retired, retired, disabled and not-in the
labor force.
\begin{equation}
Pr\left(Y_{i}=k\right)=\frac{e^{\sum_{a=1}^{A}{\beta_{a,k}\left(UR_{i}\times
Age_{a,i}\right)}+\beta_{X,k}X_{i}}}{\sum_{j=1}^{J}e^{\sum_{a=1}^{A}{\beta_{a,j}\left(UR_{i}\times Age_{a,i}\right)}+\beta_{X,j}X_{i}}}\nonumber \\
\end{equation}
The estimation results (marginal effects) are shown in Table 7. A one
percentage-point increase in the unemployment rate is associated with a
2.3 percentage-points increase in the probability of working full-time,
with a 0.6 percentage-points increase in the probability of working
part-time and with a 3.6 percentage-point reduction in the probability
of being retired, between the ages of 62 and 64. We also find that a one
percentage-point increase in the unemployment rate increases the
probability of being partly retired (i.e. reporting being retired but
also working part time) by 1.8 percentage points and decreases the
probability of being retired by 2.1 percentage points. Thus, our
findings indicate that the unemployment rate upon leaving the military
have very long-term effects on veterans’ labor force status and on their
retirement decisions.
Table : Effect of unemployment rate at time of exit from active service
on labor force status between ages 60 and 70.