Educational Benefits and Military Service: An Analysis of Enlistment, Reenlistment, and Veteran's Benefit Usage 1991-2005

Montgomery GI Bill (MGIB) educational benefits are a prime recruiting tool in today's all-volunteer military. This paper studies the effects of changes in education benefits using data of the period 1990–2005. Higher benefits lead to higher separation due to both pure incentive effects and by attracting more college-oriented youth into military service. We deal with potential selection issues by distinguishing between anticipated and unanticipated benefit changes. Higher education benefits are associated with higher separation from the Army and Air Force, but not the other services. A $10,000 increase in MGIB benefits is estimated to increase usage by about 5 percentage points, but the duration of usage is estimated to be insensitive to benefit levels.