Contextual effects of military presence on women's earnings

This article employs 1990 Public Use Microsample data from the U.S. Census, stratified by labor market area (LMA), to estimate the effect of military presence-defined as the proportion of local labor force participants employed as members of the active-duty armed forces-on the annual earnings of women workers in the paid labor force. Findings suggest that, other things being equal, women pay an average annual earnings penalty of approximately 5 percent per each increase of 10 percent in the local military presence. Military presence is argued to constitute an influential but often unrecognized structural feature of many local LMAs in the United States. Its impact on women's earnings is also discussed in relation to the well-documented economic disadvantages experienced by military wives. While the earnings penalties experienced by this group of women have hitherto been explained almost solely in terms of the individual human capital penalties they incur as a result of their status as tied migrants, this paper suggests that high levels of military presence potentially affect the earnings of all women in the local labor market. Military presence therefore constitutes an additive penalty for military wives. Potential drivers for the observed relationship between military presence and women's earnings are discussed, including concentration in the market for civilian jobs, or monopsony, as well as the potential impact of military presence on the local civilian occupational distribution.