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Incarceration and Earnings: Distributional and Long-Term Effects

Journal of Labor Research volume 40, pages 58–83 (2019)Cite this article

Abstract

Before and after incarceration, the typical prisoner differs from the typical American in several ways, including education, employment prospects, and earnings. Current research on the effect of incarceration on earnings predominantly uses techniques that characterize incarceration’s effect on mean wages and is limited to observing wages immediately after release. I employ data drawn from the National Longitudinal Survey of Youth and a variety of quantile regressions to estimate differential incarceration penalties across the wage and income distribution. I also estimate the long-term effects of incarceration on mean wages, income, and labor supply. Results suggest that the incarceration wage penalty is relatively homogenous across wages, while more severe penalties are estimated at lower income levels, suggestive of incarceration’s deleterious effect on labor supply. Mean earnings and labor supply penalties are most severe in the period after release but gradually diminish over time for releasees that do not experience additional incarceration spells.

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Notes

  1. California (Grogger 1995; Kling 1999), Georgia (Needels 1996), Texas (Mueller-Smith 2014) and Washington (Lyons and Pettit 2011; Pettit and Lyons 2007; Pettit and Lyons 2009). Waldfogel (1994) draws on records from the Administrative Office of the U.S. Courts (AO). Bhuller et al. (2016) use Norwegian prison and court records.

  2. Attrition may arise from death, refusal to continue with the survey, or inability to contact or locate the respondent.

  3. Most respondents are 18 by 1983.

  4. Appendix Table 7 provides further detail of the distribution of observations across the wage distribution.

  5. This approach is adapted from Fernández-Kranz et al. (2013), who examine the wages of Spanish mothers before and after giving birth.

  6. Although the inclusion of these controls induces attenuating effects, these variables are a potential source of endogeneity. Analogous estimates without these controls are qualitatively similar and are available upon request.

  7. Criminal activity variables are not included in the at-risk panel due to collinearity.

  8. Panels are unbalanced. Balanced panel results largely similar and available upon request.

  9. Results of these tests are presented in appendix Table 8.

  10. Tests of significance between quantiles and mean estimates are presented in appendix Table 8.

  11. Pooled OLS results are qualitatively similar and are available upon request.

  12. Taking this into consideration, I reestimate (1) and (2) with prior incarceration restricted to spells in the previous six survey waves. Estimates are largely unchanged and are available upon request.

  13. Pooled OLS estimates for employment and labor force participation are qualitatively similar and are available upon request.

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  1. US Food and Drug Administration, 10903 New Hampshire Avenue, Silver Spring, MD, 20903, USA

    Christian Brown

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Appendix

Appendix

Table 7 Wage distribution of incarcerated respondents and observations
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Table 8 Tests of interquantile and mean-quantile significance
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Brown, C. Incarceration and Earnings: Distributional and Long-Term Effects. J Labor Res 40, 58–83 (2019). https://doi.org/10.1007/s12122-018-9280-0

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Keywords

  • Incarceration
  • Earnings
  • Quantile regression
  • Longitudinal quantile regression
  • NLSY79

JEL

  • J15
  • J24
  • J31