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Although the previous study shed a great deal of light into the dynamics of the labor market behavior of veterans, it is also important to see whether their outcomes immediately after leaving the military differ from that of their civilian counterparts. The core challenge is that veterans who leave military employment are, by definition, transitioning either from one employment to another, or moving out of the labor market. The appropriate civilian counterparts, then, are individuals undergoing similarly significant labor market transitions, either to another employer or out of the labor market.

Therefore, in this report, we examine how veterans move into employment after leaving the military by comparing them to three sets of civilians. The labor market outcomes of veterans are first compared to those of each civilian comparison group in turn, and then are analyzed relative to the outcomes all three comparison groups. The first comparison group is comprised of 20-24 year old civilians who become unemployed after a relatively long period of continuous employment. The second group consists of civilians who had left a single job that was held for a substantial period of time. The third and final civilian comparison group, which most closely mirrors a Current Population Survey cohort, is made up of a random sample of civilians in a particular week, whose outcomes are compared to those of a group of young veterans in the same week. In this way the outcomes of veterans and civilians can be compared during the same calendar time, which means that they are facing common macroeconomic conditions, such as unemployment rates, job creation, and labor market demand.

Of course, in order to correctly make the comparisons, it is important to control as much as possible for the differences in the characteristics of veterans relative to civilians. Thus, after making straightforward comparisons of veterans to those of the three civilian cohort groups, we assess the labor market outcomes of veterans relative to those of our civilian comparison groups, controlling for important demographic and labor market characteristics, such as race, gender, ability and receipt of unemployment compensation benefits. We apply these controls beginning in Section 4 of this study, entitled "Labor Market Dynamics."

In Section 5, we differentiate veteran outcomes by type of military service, whether in the regular military, National Guard or Reserves. Section 6 analyzes the impact of Unemployment Compensation benefits. Finally, we compare the post-separation earnings of veterans to those of their civilian cohorts.

Our core findings are as follows:

• Discharged veterans are more likely to be employed than their civilian counterparts. They are also less likely to be out of the labor force.
• These results are consistent, but differ in magnitude, depending on whether the veterans were regular military or in the National Guard or Reserves. By and large, both employment and labor market participation are higher, and unemployment is lower, for those whose service was in the Guard or Reserves.
• The financial returns to military service are significant. Former service members earn more than any of the civilian groups to which they were compared.

In this study we use a well-known dataset, the 1997 National Longitudinal Survey of Youth to examine the labor market outcomes of 20-24 year old veterans 1, 13, 26 and 39 weeks after they exit the military. We begin by describing the dataset, and then document what proportion of veterans are employed, unemployed, out of the labor force and in military service at each point in time. This examination includes an analysis of how much veterans' experiences vary by their characteristics, such as race and ASVAB scores. We conclude by describing the labor market trajectories of unemployed veterans.

This report represents the first part of a two part study. The second part will expand on this snapshot analysis by providing a more detailed analysis of the factors contributing to unemployment, and the pathways taken to work. Since recent veterans may be productively using unemployment compensation to search for the best possible job, or to engage in additional study, the analysis of outcomes will be expanded to include a study of the educational attainment, and earnings of veterans, as well as a comparison of the outcomes of veterans to observationally similar non-veterans. The study will also examine, to the extent possible, veterans' use of training programs. In addition, since the unemployment surge coincided with a surge in Reserve/National Guard deployments, the second part will also examine, to the extent possible, the variation in outcomes for regular military versus Reserve/National Guard service members.