By Lucia Mutikani
WASHINGTON, Feb 25 (Reuters) - U.S. military veterans who have been deployed overseas for prolonged periods struggle to find work because of the traumas of war, as well as training that does not readily translate into the civilian world, according to research by the Federal Reserve Bank of Chicago.
High joblessness could not be explained by the business cycle and by demographic differences between new veterans and civilians, two Fed economists said in a paper published on Monday.
"Individuals who return from wartime service may suffer from a variety of issues when returning home that can affect their employment prospects," senior economist R. Jason Faberman and senior associate economist Taft Foster wrote in the paper.
Unemployment among post 9/11 military veterans stood at 11.7 percent in January, 3.8 percentage points above the rate for the civilian population. About a quarter of a million former service men and women were out of work in January.
Joblessness among this group is set to worsen as the war in Afghanistan winds down. More than 1 million service members are projected to leave the military by 2016.
The Obama administration and Congress have pushed forward an array of measures, including tax credits for companies employing veterans of the Iraq and Afghanistan wars.
While come companies are actively recruiting veterans, there is no sign of an overwhelming response.
"The extended deployments that began in late 2001 and continue to the present period have not only put a strain on these individuals during their military service, but also appear to be hampering their labor market outcomes once they return to civilian life," Faberman and Foster wrote in their paper.
They cited the "physical and psychological effects of warfare," and said the training received during a wartime deployment differs from skills acquired during peacetime deployment.
"If skills gained from peacetime training are more transferable to the civilian labor market, then those veterans who return from wartime service may be at a relative disadvantage when seeking civilian employment," they said.
The Chicago Fed paper looked at data from 1989-2012. While the economists identified long deployments overseas as the root cause for the high incidence of unemployment, they said it was hard to explain why this was the case.
The economists also noted that higher demand for personnel during wartime might cause recruiters to reduce enlistment standards. Indeed, their analysis found that recent veterans tended to be younger and less educated than the general working-age population.
"The high unemployment rates may simply reflect the reentry into the labor force of individuals who would have had trouble finding work regardless of military service," they said.
New veterans are 32 years old, on average, compared with an average age of about 43 for the civilian population, their analysis found. Older veterans are 61 years old, on average.
"The fraction of new veterans with a college degree is just over 14 percent, compared with 21 percent for the non-veteran population," they said.
"Enlistment standards cause very few veterans to have less than a high school degree, but the fraction with only a high school degree is 42 percent, compared with 32 percent in the non-veteran population."