Essays on veterans disability compensation and the effects of military service

Abstract

This dissertation consists of three empirical studies, each using administrative data from the U.S. Army, the Department of Veterans Affairs (VA), and the U.S. Social Security Administration. The first chapter investigates the correlation between local labor markets and VA Disability Compensation (DC) receipt among National Guard veterans who deployed to a combat zone between 2003 and 2006. I find that veterans from hometowns with low employment-to-population ratios are more likely to receive DC for both PTSD and physical conditions than veterans from hometowns with high employment-to-population ratios, but this association is stronger for PTSD than it is for physical conditions. PTSD awards that result in monthly benefit payments of at least $1,500 account for most of the correlation between employment-to-population ratios and PTSD, while only physical awards that generate relatively low payments are associated with employment-to-population ratios. The second chapter, a joint project with David Autor, Mark Duggan, and David Lyle, analyzes the effect of the DC program on Vietnam veterans' labor force participation and earnings. Exploiting the 2001 Agent Orange decision, which expanded DC eligibility for Vietnam-era veterans who served in-theater but not for other Vietnam-era veterans, we assess the causal effects of DC eligibility by contrasting the outcomes of these two Vietnam-era veteran groups. We estimate that benefits receipt reduced labor force participation by 18 percentage points among veterans enrolled due to the policy, though measured income net of transfer benefits rose on average. The third chapter exploits enlistment test score cutoffs in a fuzzy regression-discontinuity (RD) design to evaluate the causal effect of military service on mortality for individuals who applied to the active duty U.S. Army from 1996 through 2007. Fuzzy RD estimates suggest that military service does not increase mortality, but I cannot rule out positive effects. Ordinary Least Squares (OLS) estimates that compare applicants who did not enlist to soldiers with similar characteristics provide additional evidence that military service does not increase mortality. OLS estimates also indicate that a soldier's first year in the Army is associated with substantial reductions in mortality relative to nonveteran applicants.