Supply Rate and Equilibrium Inventory of Air Force Enlisted Personnel: A Simultaneous Model of the Accession and Retention Markets Incorporating Force Level Constraints

The objective of this research is to develop and test a general model of the Air Force manpower market. Previous studies of manpower supply have had mixed results, some even indicating that enlistments are negatively related to the Air Force wage. This study indicates that previous work failed to account for the simultaneous determination of enlistments and retentions and so has misinterpreted their regressions as supply equations when they are, in reality, reduced from equations resulting from the joint interaction of Air Force demand and enlistment supply activity. A stochastic process model is used to represent the Air Force manpower market. The variables which determine the levels of the steady state manpower inventory, personnel turnover and new enlistment flows are the mandated force level requirement, Air Force and civilian wages, the unemployment rate and the perceived civilian returns to Air Force provided training. Because both the enlistment rate as well as the planned duration of service are treated in the model it is possible to trace the impact of changes in the determining variables upon retention and enlistments. The empirical work rejects the standard regression 'supply' approach and supports the simultaneous demand and supply approach developed in the study.