Does Veteran Status Impact Wages?

Abstract: Individuals who serve in the United States military experience increases in human capital. This paper investigates how these increases in human capital are treated in the labor market. Different from previous research, this paper observes a state’s political lean, and how this affects the wages of veterans. The Democratic party is usually seen as the pro-labor party, while Republicans usually talk more about supporting veterans’ benefits. The sample is obtained from the 2012 American Community Survey, and election data is obtained from uselectionatlas.org. Using fixed effects for both occupation and education level, it is found that, overall, veterans experience a wage premium. Females experience the largest wage premium, while Black individuals experience a slight wage penalty. In states which vote for Republican governors, it is estimated that veterans earn more compared to non-veterans. Veterans may experience different wages because the human capital investment they experience is different than the human capital investments non-veterans experience.