Veteran Reintegration: Identifying the Long-Term Effects of Recessions on Earnings, Wealth, and Retirement Decisions

Published: 2017
Project ID: UM17-09

Abstract

Prior research indicates that young workers who enter the labor market during a recession have lower wages, and that the effects last at least 15 years. This initial experience could affect workers’ eventual wealth accumulation and retirement decisions, but little information exists about potential long-run impacts. This proposed project uses a source of exogenous variation—the timing of older veterans’ exit from military service—to identify the long-run effects of recessions. We plan to combine Health and Retirement Study public-release files and the Social Security detailed-earnings files (restricted access) to form a dataset with sufficient variation and detail to examine these questions. Given the depth of the recent recession, understanding more about how recessions affect workers over the course of their careers will be helpful in understanding the likely wealth accumulation and eventual retirement decisions of today’s workers.

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