Military service and future earnings: Evidence from an Informed Difference-in- Differences (IDID) approach

Introducing a new informed difference-in-differences (IDID) approach, and utilizing particularities in the Israeli laws and regulations that exempt married women from military service, we provide evidence about the effects of compulsory military service on future earnings of veterans. The IDID estimates suggest that women experience a highly statistically and economically significant 9.9 percent increase in their wages due to their military service. These effects are smaller than those experienced by minority groups, in common with the evidence from this literature. Finally, the discrepancies we found between the naïve and the consistent estimates suggest that people who voluntarily avoid military service are those who face the highest opportunity costs of service.