Addressing the Labor Force Participation Disparity Between Veterans and Non-Veterans

The current labor force participation rate for veterans is 47.8%, while for non-veterans it is 64.5%. I investigated possible barriers to labor force participation that are unique to veterans that might help to explain the disparity in labor force participation between veterans and non-veterans. Upon replicating the results of a paper done by Courtney Coile, Mark Duggan, and Audrey Guo, which argues that the disparity in labor force participation rates can be explained by growth of the Department of Veterans’ Affairs Disability Compensation Program due to program liberalization in periods 2001 and 2010, I examined whether changes in health outcomes for veterans might instead explain the disparity. Using Current Population Survey data from 1980-2019, the same dataset that was used in the replicated paper, I find that there were no significant changes over time in labor force participation for veterans until 2015, which is after the two periods of liberalization of the Disability Compensation Program. Additionally, I find that although veterans report themselves in worse health starting in 2009, I find that this has no significant impact on labor force participation. Therefore, while I can conclude that growth in the Disability Compensation Program due to liberalization does not explain the disparity in labor force rates, I cannot conclude that health presents an explanation either. Future research should focus on other factors that might contribute to this disparity in labor force participation rates such as discrimination based on veteran status or effectiveness of current VA offered employment services.