An Analysis of Enlisted Early Separations Under the Navy's VSI/SSB program: The Impact of Eligibility and Program Benefits

This thesis investigates the behavior of Navy enlisted personnel who were eligible for the FY93 VSI Voluntary Separation IncentiveSSB Special Separation Bonus Program. The thesis uses DMDC data on program takers as of February 1993. The objectives of the thesis are 1 to identify factors that influence individuals to accept or not accept a voluntary separation bonus 2 to compare FY93 results with FY92 results to determine if the same factors are consistent for both years of the program 3 to determine the forecasting accuracy of the binomial logit model in predicting VSISSB behavior and 4 to evaluate the effect of changes in the availability of transition benefits in 1993. Both binomial and multinomial logit models are estimated to explain the decision to take a bonus, and also which of the two options to accept. The results show that the statistically significant factors are consistent over the two years, and are consistent with economic theory. The binomial logit model is found to be highly accurate in predicting take behavior and program choice. Finally, making transition benefits available to VSI recipients increased the proportion of leavers choosing VSI. The thesis provides recommendations for improving forecasting accuracy and for future research.