The effect of activation on the post-activation civilian earnings of reservists

To fight wars in Iraq and Afghanistan, the Department of Defense has relied heavily on its reserve components. Among the hardships of activation is the possibility that reservists might suffer an earnings loss following their period of active-duty service due to difficulties reentering the civilian labor market. This paper reports estimates of the effect of activation on the post-activation civilian earnings of reservists employing administrative data on earnings and periods of activation. Our results indicate that reserve activations lead to moderate losses in civilian earnings in the year immediately following activation that disappear and turn to earnings gains in subsequent years.

► We estimate the effect of reserve activation on civilian earnings. ► Activation causes civilian earnings to fall in the year following activation. ► These earnings losses turn to earnings gains in subsequent years.