An Examination of the Effects of Voluntary Separation Incentives

As a means of facilitating the defense drawdown, the Department of Defense offered eligible personnel either the Voluntary Separation Incentive or the Special Separation Bonus (VSI/SSB), a program to induce mid-career personnel to separate from service. Two key questions for policymakers concerned about the success of this program are (1) Did the program induce substantial separations (over and above what would normally occur)? and (2) Did the program induce marginal performers to leave? In this report we use data on Army enlisted personnel to answer these questions. We estimate that the VSI/SSB program increased separations by 13 percentage points over and above what we would have expected for personnel who met the eligibility criteria during the drawdown. We also found that those who were low-quality were more likely to accept the VSI/SSB offer.