Estimating Military Personnel Retention Rates: Theory and Statistical Method.
Abstract
A Dynamic Econometric Retention Model (DERM) is designed for studying the effects of alternative compensation policies on the retention behavior of Air Force officers, including the Uniformed Services Retirement Modernization Act, the President's Commission on Military Compensation, and the Uniformed Services Retirement Benefits Act. DERM is a model of sequential behavior containing the appropriate econometric method for estimating the retention rate. The econometric method is a maximum likelihood procedure endogenously determined by the specification of the behavioral model. It differs from earlier approaches in that it explicitly considers the behavioral effects flowing from decomposing the disturbance term into permanent and transitory components. An important implication of DERM is that retention rates depend both on prospective future returns to remaining in the military on past occurrences. If this is correct, then simple regression models should overpredict the retention gains of proposed compensation policies, exactly what happens in two recent reenlistment studies that use regression analysis. (Author)
Document Details
- Document Type
- Technical Report
- Publication Date
- Jun 01, 1980
- Accession Number
- ADA087430
Entities
People
- Glenn A. Gotz
- John J. Mccall
Organizations
- RAND Corporation