Compulsory Military Service and Its Impact on Subsequent Civilian Wages: Evidence From Recent Young Veterans in South Korea

• Main Author: Park, Kihong
• Format: text
• Published: Animo Repository 2022
• Subjects: Compulsory military service; conscription; young veterans; civilian wages; South Korea
• Online Access: https://animorepository.dlsu.edu.ph/apssr/vol22/iss3/2; https://animorepository.dlsu.edu.ph/context/apssr/article/1460/viewcontent/RA_201.pdf
• Institution: De La Salle University

Using the Youth Panel survey spanning the years from 2015 to 2018, this paper attempts to find new evidence on the relationship between veteran status and subsequent civilian wages in the Korean youth labor market. As the estimated returns to conscription obtained from OLS are biased due to the non-random selection of the conscripts, this study accounts for this selection on observables by implementing a nonparametric propensity score matching (PSM) method. Through the use of the PSM framework, this article provides some evidence in favor of the existence of negative wage impacts of compulsory military service, suggesting that the costs of performing military service outweigh its benefits. The results from the PSM approach highlight the importance of selection effects in the relationship between conscription and subsequent civilian labor market outcomes of conscripts by illustrating the direction of selection bias and the large discrepancy between OLS and PSM estimates.