Factors Affecting Entrepreneurship among Veterans

John B. Hope, Brian Oh, and Patrick C. Mackin. SAG Corporation, Annandale, VA 22003



Abstract

The authors investigate whether military service has a statistically significant impact on veteran

entrepreneurship using three complementary data sources. The 2007 Bureau of Labor Statistics

(BLS) Current Population Survey (CPS) March Supplement is used to construct the control sample,

and the 2007 CPS Veterans Supplement (veterans-only sample) and the Defense Manpower Data

Center’s (DMDC) 2003 Survey of Retired Military (military retiree sample) are used to construct

two experimental groups. The analysis tests the hypothesis that military service imparts some

unique training or acculturation that makes veterans more likely to become self-employed than

otherwise similar individuals.


Using the control sample, the authors find that veterans are more likely than otherwise similar

individuals to be self-employed. They confirm the findings of earlier studies that show significant

positive effects for military service on the probability of self-employment and are able to quantify

those marginal effects in the range of 45 percent to as high as 88 percent.


Analysis of the veterans-only data, however, shows that self-employment is negatively correlated

with the length of military service. This result suggests that higher rates of self-employment among

veterans are due to individual characteristics, rather than training, education or other qualities

imparted by military service. An exception to this negative correlation occurs among career military

retirees (those with more than twenty years of military service); in this subgroup of veterans, self-employment increases with years of military service.


The authors posit that this relationship may result from a wealth effect – military retirees with longer careers receive larger military pensions and may be financially better able to pursue self-employment. The results for the control sample indicate that age, marital status, gender, occupation, home ownership, military service, and some of the regional and race variables have a significant effect on self-employment, while education and children do not. In the veterans-only sample, variables for those who chose the military as a career path, age, race, gender, and children are positive indicators of self-employment, while employment in service occupations and manufacturing occupations are negative. The military retiree sample shows single, white, enlisted and Marine Corps status are positive indicators of self-employment


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