How Veteran-nonveteran wage gaps across the wage distribution have evolved over time

Abstract: We examine how veteran-nonveteran wage gaps evolved over 1979-2017. Specifically, we estimate veteran wage differentials at each decile across the unconditional wage distribution to allow for heterogeneity in the size and direction of the wage gaps. Low-earning veterans have consistently earned a wage premium, though it has declined in magnitude. High-earning veterans earned a premium early on, albeit smaller (in percentage terms) than low-earning veterans; the premium disappeared by the 1990s, becoming a wage penalty in recent decades. Decompositions of the estimated gaps reveal that lower returns to education-which worsen over time-contribute to the observed wage gap dynamics.

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