The Effect of Enlistment Bonuses on First-Term Tenure Among Navy Enlistees

While enlistment bonuses (EBs) have traditionally been used to affect accession decisions, it seems likely that offering a recruit a bonus that is payable at the end of training could also reduce attrition. This study attempts to assess the relationship between the size of the enlistment bonus offered a recruit and the likelihood that the recruit attrites - holding all else constant. Following recent studies of enlistment incentives, we employed nonexperimental data (data generated from the administration of the EB program) to explore this relationship. Using this type of data creates an empirical challenge because both the size of enlistment bonuses and attrition behavior are likely to be substantially affected by unobserved variables. While there are various empirical techniques to control for the effects of unobserved variables under specific circumstances, we find that these methods have only limited applicability to the current analysis-that is, they can only control for some of the effects of omitted variables. Among our empirical findings, we find limited evidence that enlistment bonuses reduce attrition. While we believe that these statistical results are not substantial enough to guide policy, we suggest that they are sufficiently compelling to justify the Navy pursuing experiments on the issue.