Race And Long Term Returns To U.S. Army Service

Serving in the Army provides big returns to black veterans.

This paper links the universe of Army applicants between 1990 and 2011 to their federal tax records and other administrative data and uses two eligibility thresholds in the Armed Forces Qualification Test (AFQT) in a regression discontinuity design to estimate the effects of Army enlistment on earnings and related outcomes.  

In the 19 years following application, Army service increases average annual earnings by over $$4,000 at both cutoffs. However, whether service increases long-run earnings varies significantly by race. Black service members experience annual gains of $5,500 to $15,000 11–19 years after applying while White service members do not experience significant changes. 

By providing Black service members a stable and well-paying Army job and by opening doors to higher-paid post-service employment, the Army significantly closes the Black-White earnings gap in our sample.

From the full paper by Kyle Greenberg, et.al.