Final Report for Office of Naval Research Contract N00014-76-C-0782. Volume II,

Abstract : The research for the Office of Naval Research contract has focused on the specification of the participation rate, unemployment rate and school enrollment rate equations, and incorporating them into the annual and quarterly WEFA models. Preliminary enlistment equations have also been developed for the Department of Defense and the Navy. Although the military equations have not been simulated in the context of the WEFA model, some preliminary implications have been developed from the results obtained to date. The demographic shift in the population, which has been highlighted in the research, will not begin to appear before 1980. In other words, conditions for recruitment of Navy personnel are still relatively favorable today. After 1980, however, conditions for recruitment in the context of the All Volunteer Forces will deteriorate. First, between 1980 and 1995 the number of young people in the population will decline by approximately 25 percent. Second, the decline in the number of young people in the labor force is likely to be even sharper than the population decline among 16-24 year olds. Third, the pool of structurally unemployed worker should decline substantially. Fourth, as a further result of the shortage of young workers, their relative wages will increase substantially. That is, industries that hire young people will find their wage bill increasing more rapidly than wages being paid by other industries.