WHAT HAPPENS TO THE EARNINGS OF MILITARY RESERVISTS WHEN THEY ARE ACTIVATED? EVIDENCE FROM ADMINISTRATIVE DATA

From 2001 through 2008, the US Department of Defense (DoD) has activated more than 700,000 military reservists. Activation imposes a variety of costs on reservists. Among those costs is potentially a decline in total earnings during the period of activation. In this paper, we use administrative data on military and civilian earnings to estimate how earnings change when reservists are activated and the causal effect of activation. Contrary to press accounts and DoD survey evidence, our estimates indicate that, on average, the earnings of activated reservists increase substantially when they are activated and that earnings losses are not common.