The Effect of Enlistment and Reenlistment Bonuses on Participation in the Navy Selected Reserve

In 2005, the Navy implemented changes to the Selected Reserve incentive program. The likely retention effects of these changes are not known, so we estimate the retention effect of enlistment and reenlistment bonuses to help the Navy determine the most efficient allocation of Selected Reserve Bonuses. Reenlistment bonus eligibility increases reenlistment rates and the share of Sailors who decide to obligate for at least a 6-year reenlistment contract. Thus, reenlistment bonus eligibility can be used to target personnel to reenlist and obligate for longer contracts. Receiving a reenlistment bonus does not significantly influence the decision to stay in the Selected Reserves; however, continuation rates among bonus recipients and nonrecipients are relatively high. Consequently, if the Navy is considering lump sum payments, we recommend it first be piloted to reenlistment bonuses. Targeted enlistment bonuses can be used to improve Selected Reserve continuation rates. For prior-service and non-prior-service enlistments, receiving a bonus increases the likelihood of completing the first 12 or 24 months of service. Further, the continuation rates of non-prior-service entrants who did not receive a bonus were similar to the rates of prior-service entrants, suggesting that an increase in the pool of non-prior-service accessions would not decrease overall manning levels.