TY  - JOUR
AU  - Smith,Jeffrey S.
AU  - West,James E.
TI  - Retirement Pay and Officer Retention
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 18502
PY  - 2012
Y2  - November 2012
UR  - http://www.nber.org/papers/w18502
L1  - http://www.nber.org/papers/w18502.pdf
N1  - Author contact info:
Jeffrey Smith
Virginia Military Institute
E-Mail: smithjs@vmi.edu

James West
Baylor University
Department of Economics
One Bear Place # 98003
Waco, TX  76798-8003
Tel: 254-710-6126
Fax: 254-710-6142
E-Mail: j_west@baylor.edu
M3  - presented at "State and Local Pensions Conference", August 17-18, 2012
AB  - We use data from a natural experiment in which retirement benefits were reduced by congressional legislation and later restored to estimate the effect of future retirement benefit eligibility upon the decision of whether to remain in the U.S. military.  We find that the generosity of retirement benefits is significantly correlated with the decision to remain in service until members qualify for benefits.  The estimated effect of a 20 percent reduction in the generosity of retirement benefits upon the probability of remaining on active duty is  equivalent to the effect of a 0.27 percentage point reduction in the unemployment rate, or approximately a 2 percent increase in the GDP growth rate.
ER  -