Working Paper: Intergenerational Benefits and Military Service

Full Title: Marching Across Generations? An Analysis of the Benefits Transfer Provision of the Post-9/11 GI Bill

Full Abstract: The post-9/11 GI Bill provides a unique form of deferred compensation in which the employee receives generous education benefits that can be transferred to a family member in exchange for additional military service. Whether soldiers should transfer benefits to a spouse or children is essentially a multi-period optimization problem. We test predictions from our economic model of benefits transfer against rich observational data from the program. Our analysis suggests that the GI Bill transfer provision is a regressive benefit: utilization rates are highest among senior service members who earn higher wages, are near or beyond pension eligibility, and have already completed their education. Leveraging variation across cohorts in eligibility for the transfer provision, we find that the policy had a small stabilizing effect on Army retention.

EdPolicyWorks Working Paper Series No. 53. December 2016.