Effect on retirement decisions

\label{effect-on-retirement-decisions}
Given that we find effects on earnings and accumulated earnings but do not find statistical significant effects on wealth, it is possible that reentering the civilian life in periods of high unemployment does not affect retirement. In this case, we might expect that veterans who enter the labor market under poor conditions act in ways to mediate those effects prior to retirement. We documented one instance of this above; these veterans are more likely than others to attend and complete college. But to investigate this further, we study two additional outcomes: work expectations and labor force status in old age.
To estimate the effect on work expectations we estimate the linear model in equation (5). The outcome \(y_{\text{it}}\) is the veterans’ reported (stated) probability (from 0 to 100) of working full-time?? or searching for work at various ages.11In each case, we include only veterans of appropriate age groups. Need more here?? We include a quadratic-term in age and similar controls as in the previous regressions. We cluster the standard errors at the individual level.
\begin{equation} {}_{\text{it}}=\alpha+\beta_{1}UR_{i}+\beta_{2}\text{Ag}e_{\text{it}}+\beta_{3}\text{Age}_{\text{it}}^{2}+\beta_{4}X_{i}+{\gamma_{t}+\epsilon}_{\text{it}}\nonumber \\ \end{equation}
The estimation results are shown in Table 6. In the OLS model, we find that an increase of 1 percentage point in the unemployment rate at the time of entering the civilian labor market increases the reported chance of working full time at every age tested; in the 2SLS model, the estimated coefficients are larger than in the OLS model although not all achieve statistics significance. Finally, we test a model of the probability of claming Social Security benefits; there is some evidence that veterans who enter the labor market during poorer conditions are more likely to claim Social Security, although the results of the 2SLS model generally suggest there is no statistically signfiicant difference in rate of claiming benefits.
Table : Effect of unemployment rate at time of exit from active service on full-time work expectations