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AD-A270 298 TION PAGE or.o Appov-d IINPG11 .111 OM5 No 0.74-0188 ( a '." n.ut o(' . )P'.., rsi. (cid:127) IltfhF C L 1 .,-' , tc.','w~ q ns9 -r&;(cid:127). rC,. J~dltna ta (cid:127)Otou t'I .,.111" .h._-P'ttio( (cid:127)Ol 'Tf -'n it -E. I' .c rrfl'nt lf. l.Fatt.no t) 0(cid:127)l l(%lm (cid:127) 09 0nth to~c t CS((cid:127)f&d /,:> .1. fl 9 Dau avia Ct1-1C -, other ecl of I-,, 'dqet.l onC It 'O03 .. . uiT UNLY (Ledve ,al)r.) I. REPORT DATE 3. REPORT TYPE AND DATES COVERED 1993 THS S /Rj1f0RA]gT 4. TITI E AND SUBTITLE 5. FUNDING NUMBERS Air Force Pilot Retention: An Economic Analysis 6. AUTHOR(S) Stephen P. Barrows 7. PERFORMING ORGANIZATION NAME(S) AND ADDRESS(ES) 8. PERFORMING ORGANIZATION REPORT NUMBER AFIT Student Attending:Penn State University AFIPTICI/CIA-93126 -9 SPONSORING,'MONIFORING AGLrIC'Y NAME(S) AND ADDRESS(ES) 10. SPONSORING/MONITORING DEPARTMENT OF THE AIR FORCE AGENCY REPORT NUMBER AFIT/CI 2950 P STREET WRIGHT-PATTERSON AFB OH 45433-7765 11, SUPPLEMLNTAR) NOTES 12a. DISTRIBUTION ;AVAILABILITY STATEMENT 12b. DISTRIBUTION COUE Approved for Public Release IAW 190-1 Distribution Unlimited MICHAEL M. BRICKER, SMSgt, USAF Chief Administration 13. ABESTRACT (M.ai,niunt 200wotrds' ."1 1 0 4 0 ,3 1190,13111-112f /3Fll21 0r/1l/5ll/11/r//ll 14. UIbJ (cid:127)CT TLEMS 15. NUMBER OF PAGES 67 16. PRICE CODE 17. SECURIIY CLASSIFICATION 18 SECURITY CLASSIFICATION 19. SECURITY CLASSIFICATION 20. LIMITATION 9 ABSTRACT -:OF REPORTl OF THIS PAGEI OF ABSTRACT IN 7 40-01 '80-SS00t rd Fof'Ti 298 (PI.v 2 1(cid:127)(1) 2',.'t{. < , (cid:127) (cid:127), ,j , ; . Air Force Pilot Retention: An Economic Analysis by Stephen P. Barrows, 2LT, USAF 1993 68 Pages Ma-;ter of Arts Degree in Economies The Pennsylvania State University ..... .. I3 Acopfý.iav For JDTIC J'UAW&±: X~~ii , Abstract The Air Force has been concerned with increasing the retent ion rates of its pilots. Three primary economic issues are prsented in this paper. First, the economic theory of general and specific training in human capital is discussed. Human capital theory suggests that the type of training pilots receive may impact retention rates. Air Force pilot training will be discussed in light of this theory. The second issue presented is the theory of compensating wage differentials. It is demonstrated that the lifetime monetary compensation offered to pilots in the Air Force Is significantly below that of pilots flying for a major airline. Monetary compons;ation, as wel l as non-wage amenities and job attributes, .,re discussed and compared in the two sectors. The final subject discussed concerns the institutional issues which may impact pilot retention. ft is suggested that. the Air Force's institutional structure resembles that of an internal labor market. Tnternal labor market theory is discusscd, as well as alternalive institutional structures which might be used to incrcase pilot retention. J. ..... ....- ....- .. ....... I Key Primary and Secondary Sources Gary Becket, . u..n.. . .. (New York: Columbia UP, 1975). S.(cid:127)Q(cid:127).n.e ..Yx. .. ... $... . ..... .v.y, (Atlanta: Future Aviation Professionals of America, 1992). Congressional Budget. Off ice, A..U .(cid:127).e`......(cid:127)p........L..P.nA.. 1. ..oA Tnw ()..y....g...R .t..u..a. Q..u .Ai..u.t e..' i (Washington, D.C.: CBO, August 1989). Peter B. Doeringer, and Michael J. Pioro, . ........... . .. .(cid:127).. (cid:127).... ...((cid:127) . .QW . ..x. LlQ.. Lexingi.on: D.C. Heath & Co. , 1971. Edward G. Hoffman, Pi..1 t. e n.;I& .Q -11 .A ,eiU Q t h..Q 4.r..hi . . .... ....... ... 4... . ..t....$i. .. (Maxwell AFB: Air War College, April 1988). Jud ith M . llup p, .A.... . y. V1)' e.......I.. ....... t e t...Ii , (Northridge: Cili fornia State JP, May 1989). Sherwin Rosen, "The Theory of Equalizing Difforences, t.U.nd.k.d ...Q.s .F......l r...h...p. q.. .. n.kqQ. , Volunmo 1, (New York: EIl.sevier Science Pub. Co., 1986). Russ l 1T . Rolth , Q. ..pif 'n. 4 .. ..... ri. P.G.. i..tA' .....iv... . ~.H1 .r....... ... ., (USAF Ac;i,lorny : Unpubl i shed Paper) Br ice M. Stone, Thomas R. Saving, i,arry T. Looper, and John P. MeGarrity, .r.y ..A. ir. . ... P.. .RelLe.Ln.t.....o., . . .3.ng...A. (Brook.; AFB: Air Forco Human ROsources Laboral ory, Decembiwr 1989). Michai L L. Wachter, and Randall D. Wright, "The Economin s of, Int rnaa I, abor Markot ; ," .I.;vd w. rbA.i..... 1...... QAU.. 29 (1990). Oliver F. Williamson, Michael Wachter, and Jeffr ey F(cid:143). Harris, "Underst-and tig the Fmployment. Relation: The Analysis of ................ ................. ...U........ .... ............ .. 6 (1975) Idoyrrt Ecag,'Bl Air Force Pilot Rot.ent.ioni: An Economic Analysis by St ephen P. Barrows, 2LT, USAF I q93 68 Pages Master of' Arts Degree in Economics The Pennsylvania Stiate University 4 Abst. ract The Air Force has been concerned with inereasing the rel.ent ion rates of its pilots. Three primary econofic issues are presented in this paper. First, the economic theory of general and sp.:cific training in human capital is discussed. Hluman capi tal theory suggest s that the type of t. raini ng j)i lots receive may impact retention rate.,; Air Force pilot training will be discussed in light of this theory. The second isSue prvs'ýnted is the theory of' compensating wage differentials. It is demonst rated thzt the Ii fetinie monetary compensation offered to pilots in the Air Force is significantly below that of pilots flying for a major airline. Monet ary comnenrsat ionl , as we 1 as non-wage amen 1 t. i es and jo11 attributes, are discussed and compared in the two sectors. Tue final subject discussed concerns thf, institutional issues whi ch ma' impact pilot retention. It is suggested that the Air Force's institutional structure roesembles that of an internal labor market. Internal labor irket theory is discusse;vd, as well as alt ernat ive institutioznal structure,; which |,i ght be used t.o increase pilot. retention. K fy Pr i ma ry an1 Secondiiry S ourc ,i- Gary Becker, Hi.tr. (.. p jt., (New York: CoIubM) i;A UP, 1975). . g. . ............. .. S .. r. ... u.r.y.. , (At.-lanta: Fuiture Aviation Professionals; of America, 1992). Congress iona I Budget. Off ice, A .Ijr....I..A ..ilvs .`nk .v.`.P`.1n..r; £. ... ... .P`.P i.(cid:127)R .Q.n ....A .. i.. .r..F7 r.. ... 1 . (Washi ngton, 1). C. CBO, Auguý,t. 189) . Pet. v r 13. Doori nt ig r, and rvli cha J1 P i ore , .. n..j.n.. ... I..;..o. . . .... ... . .. .L. ,exington: DC. Ileat h & Co, 1971 . Edwa rd G. Ho f man, J .Q1Q.(cid:127)..(cid:127)......Q.. i . ...... ... .f.. ... (cid:127).v.(cid:127).. 1 ?j. (Maxwel I AFB: Air War College, April 1988). Judith M. H upp, 5A...... x. _.. ... F...... l t.I R...e.. ... a, (Northridge: California State UP, May 1989). Sherwin Rosen, "The Theory of Equalizing Differences , . ........(cid:127)9. .. '.(cid:127).. , Volume 1, (New York: El sevier Science Pub. Co., 1986). Rrissol IR uTT . n 1RR otth I, , .(cid:127) Qg(cid:127) t.t.t...(cid:127)tp.. ..j(cid:127) f.y.ji.... nn.(cid:127)gu. .1U "(cid:127)x..(cid:127) (cid:127) (cid:127) P(cid:127) .r..'. ` .,......! l..l. .. ...VV......a. .(cid:127) !.!uk.e . .....9Q., lbwtn. .p..t,.(cid:127).., (USAF Academy: UnpubliF, Ihed Paper). Bri(cid:127)pi M. S. one,, 'I'homa-i R. S;aving, Larry T. Loopier, and John P. MeGPa, arP rr cr ( i tty y ,, .I(cid:127).(cid:127)..F.a.....!.v.(cid:127)t(cid:127) jq~..tj. 1.. (cid:127) . ......(cid:127) ..,.... ..j..(cid:127).... ...i.(cid:127) ,. . .(cid:127) ..(cid:127) .. ... l!.! .(cid:127).(cid:127)............e..(cid:127).. R~..ct..t. !ý(cid:127) ,t.A..on.i.. ...o...........B. oo .......t..i...(cid:127). y... (Brooks AVII: Air Force Human Resources Laboral.ory, De)(cid:127)cember 1 9t 9). Michael I. Wacht er, and Randall D. Wright, "The Economic:; oa Internal Labor Mar'kets,," ... i..t ..... .... t,. . . 29 (1990). I 01 i v(r K~. Wi I I i tin!;on , Michael Wachtor , and Jvf f'i(-y H. Harr i, "Underst~andi ng the Employment. Rel.Atiott: The Anlalysi s of I 1~ d 1 o y n cr at i c Exc. 'hnggc onor .1er.ou.-i f( , 197h "i The Graluate School Departmeni of Economics Air Force Pilot Retention: An Economic Analysis A Master's Paper in Economics by Stephen P. Barrows Submitted in Partial Fulfillment of the Requirements for the Master of Arts Degree DATE OF APPROVAL: APPROVAL BY: Dr. David Ribar Assistant Professor, Dept of Economics Chairman of the Master's Committee Dr. Michael R. Baye Associ 'e Professor, Dept of Economics Member of the Master's Committee Dr. Keith J. Crocker Associate Professor, Dept of Economics Member of the Master's Committee Dr. James D. Rodgers Head, Department of Economics