Research for Demographics

Previous studies have examined the factors that influence first-term retention. This analysis expands on prior work to investigate the impact of these factors on retention and the quality of personnel retained. We find that the aggregate pay elasticity is approximately 2 (which is similar to that found in earlier analyses), but that this result masks substantial differences in the pay responsiveness of different personnel. Upper mental group personnel displayed a pay elasticity in excess of 3, whereas personnel in the lower groups had an elasticity of approximately 1. Thus, pay increases improve the quality of the career force as well as increasing the number of personnel retained. Conversely, if Navy pay lags behind civilian earnings, the decline in retention is compounded by a decrease in quality. Upper mental group personnel seemed to be more sensitive to changes in the civilian unemployment rate as well. There is a significant relationship between advancement and retention. The effect is stronger than that expected from the related pay increase. It seems to indicate that advancement can be an effective and selective retention tool.