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Veterans’ labor force participation: What role does the VA’s disability compensation program play? (Coile et al. 2015)

Absence of conflict of interest.

Citation

Coile, C., Duggan, M., & Guo, A. (2015). Veterans’ labor force participation: What role does the VA’s disability compensation program play? American Economic Review, 105(5), 131-136.

Highlights

  • The study examined the impact of expanding eligibility for veterans’ Disability Compensation (DC) in 2001 and 2010 on labor force participation.
  • The authors conducted a nonexperimental analysis to compare veteran and non-veteran labor force participation over time using the March Current Population Survey data from 1980 to 2014.
  • The study found that veteran labor force participation was generally lower than that of non-veterans in the same 10-year age range during the periods following eligibility expansions.
  • The quality of causal evidence presented in this report is low because there could be differences in external conditions that affected the treatment group and not the comparison group. This means we are not confident that the estimated effects are attributable to veterans’ receipt of DC; other factors are likely to have contributed to the findings.

Intervention Examined

DC

Features of the Intervention

DC provides payments to veterans who have had medical conditions caused or aggravated by their military service. Veterans may apply for DC through the Department of Veterans Affairs (VA) to determine their eligibility. A VA rating board reviews and evaluates each claim to confirm whether the medical condition is service-connected and, if so, assigns a severity rating that will help to determine the DC benefit amount. DC is a tax-free benefit available to veterans throughout the remainder of their lives. In addition, veterans can collect other disability-related benefits such as Social Security Disability Insurance.

The VA has offered DC for many years to cover a range of defined medical conditions, and it has expanded this range multiple times starting in 2001. In 2001, DC coverage was extended to type 2 diabetes for Vietnam-era veterans who were on the ground during the conflict. In 2010, coverage was extended to conditions including ischemic heart disease, Parkinson’s disease, and B-cell leukemia for these veterans. As of 2010, coverage was extended to chronic fatigue, fibromyalgia, post-traumatic stress disorder, unexplained illnesses linked to environmental exposure, and other conditions for Gulf War―era veterans. As a result of these eligibility expansions, participation in DC grew from 9 percent of veterans in 2001 to 18 percent in 2014.

Features of the Study

The authors conducted a nonexperimental analysis to compare veteran and non-veteran labor force participation over time. Restricting their sample to men ages 25 to 64, the authors compared a treatment group of veterans, who might have been eligible to receive DC, with a comparison group of non-veterans, who were not eligible to receive DC but might have been eligible for other disability assistance.

The authors estimated statistical models using data from the March Current Population Survey from 1980 to 2014. They compared labor force participation rates of veterans and nonveterans in age ranges targeted by the eligibility expansions in 2001 and 2010, in five-year time periods before and after the coverage expansions.

Findings

Employment

  • The study found that veteran labor force participation was generally lower than that of non-veterans in the same 10-year age range during the periods following the eligibility expansions.

Considerations for Interpreting the Findings

Differences in external conditions for the treatment or comparison groups could have affected labor force participation. The treatment groups might include veterans not affected by the eligibility expansions. For example, the veterans targeted by the eligibility expansion in 2001 included those who served on the ground in Vietnam and had type II diabetes, but the study defines this treatment group as veterans who were in their 50s in 2000 to 2004, a definition that fits most Vietnam veterans. Thus, it is possible that other factors affecting these groups of veterans at these times could influence labor force participation in addition to the expansions in eligibility for DC.

Causal Evidence Rating

The quality of causal evidence presented in this report is low because there could be differences in external conditions that affect the treatment group and not the comparison group. This means we are not confident that the estimated effects are attributable to veterans’ receipt of DC; other factors are likely to have contributed to the findings.

Reviewed by CLEAR

May 2020

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