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Military physicians consider potential career earnings when making their stay/leave decisions. Moreover, they consider the effects of differences between military and civilian compensation at three distinct decision periods in the military career: the first year of unobligated service, the years after that point but before military retirement eligibility, and the year of retirement eligibility. We find that military retention is highly sensitive to compensation differences at the first decision and substantially less sensitive after that. We also account for endogeneity of military physician pay and retention with an instrumental variable technique, without which, estimates substantially underestimate the wage effect.

Keywords: I11; Instrumental variable estimation; J30; J33; J40; J44; J45; Military physicians; Military retention; Physician compensation; Physician labor markets; Physician retention

Document Type: Research Article


Affiliations: 1: Health Services Researcher,American Board of Internal Medicine, Philadelphia,PA, USA 2: Research Analyst,Center for Naval Analyses, Alexandria,VA, USA

Publication date: February 1, 2012

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