A New Approach to Managing the Army Selective Reenlistment Bonus
Abstract
The authors develop a theoretical model of profit maximization in which the Selective Reenlistment Bonus (SRB) is treated as a wage premium payable to servicemen who are more productive, more costly to recruit and train, and less likely to continue in the Army in the absence of the SRB. Empirical estimation of the model is based on measuring a serviceman's productivity (in terms of his civilian counterpart's occupational wage), recruitment and training costs, and separation rates. Multiple regression equations are used to estimate civilian wages (a proxy for productivity) as a function of civilian occupation, education, and age of the worker. The empirical model groups Military Occupational Specialties (MOS) into three categories--Combat Arms, Technical, and Support Services. The results for servicemen in grade E-4 reveal that the average SRB calculated by the model ($5,247) should be about the same as the actual payments ($5,297) for servicemen in Combat Arms, but should be higher ($7,308) compared to the actual ($5,312) for Technical occupations, and lower ($1,942) compared to the actual ($3,757) payments in the Support Services. The research shows that retention rates in Technical MOS can be raised by increasing the SRB. The required increase in SRB expenditures can be funded by reducing SRB payments in the Support Services. Keywords: Economics; Retention; Military pay; Recruitment cost; Human capital; Training cost; Civilian pay; Economic analysis; Military essentiality code.
Document Details
- Document Type
- Technical Report
- Publication Date
- Jun 01, 1984
- Accession Number
- ADA163816
Entities
People
- Enrique Lamas
- Judith H. Eargle
- Sheldon E. Haber
Organizations
- George Washington University