Incarceration and Earnings: Distributional and Long-Term Effects

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.

This is a preview of subscription content, log in to check access.

Fig. 1
Fig. 2
Fig. 3

Notes

  1. 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. 2.

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

  3. 3.

    Most respondents are 18 by 1983.

  4. 4.

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

  5. 5.

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

  6. 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. 7.

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

  8. 8.

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

  9. 9.

    Results of these tests are presented in appendix Table 8.

  10. 10.

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

  11. 11.

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

  12. 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. 13.

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

References

  1. Apel R, Sweeten G (2010) The impact of incarceration on employment during the transition to adulthood. Soc Probl 57(3):448–479

    Article  Google Scholar 

  2. Becker GS (1968) Crime and punishment: an economic approach. In The economic dimensions of crime (pp. 13–68). Palgrave Macmillan, Basingstoke

  3. Bhuller M, Dahl GB, Løken KV, Mogstad M (2016) Incarceration, Recidivism and Employment. National Bureau of Economic Research working paper w22648

  4. Bound J, Freeman RB (1992) What went wrong? The Erosion of relative earnings and employment among young black men in the 1980s. Q J Econ 107(1):201–232

    Article  Google Scholar 

  5. Brown C (2015) Returns to Postincarceration education for former prisoners. Soc Sci Q 96(1):161–175

    Article  Google Scholar 

  6. Buchinsky M (1994) Changes in the US wage structure 1963-1987: application of quantile regression. Econometrica: Journal of the Econometric Society 62(2):405–458

    Article  Google Scholar 

  7. Buchinsky M (1998) Recent advances in quantile regression models: a practical guideline for empirical research. J Hum Resour 33(1):88–126

    Article  Google Scholar 

  8. Bureau of Labor Statistics, U.S. Department of Labor (2009). National Longitudinal Survey of Youth 1979 cohort, 1979–2008 (rounds 1–23) [computer file]. Produced and distributed by the Center for Human Resource Research, The Ohio State University, Columbus

  9. Bureau of Labor Statistics, U.S. Department of Labor (2011) Incarcerated respondents in the NLSY. NLS News No 11–146

  10. Caspi A, Wright BRE, Moffitt TE, Silva PA (1998) Early failure in the labor market: childhood and adolescent predictors of unemployment in the transition to adulthood. Am Sociol Rev 63(3):424–451

    Article  Google Scholar 

  11. Fernández-Kranz D, Lacuesta A, Rodríguez-Planas N (2013) The motherhood earnings dip: evidence from administrative records. J Hum Resour 48(1):169–197

    Article  Google Scholar 

  12. Geller A, Cooper CE, Garfinkel I, Schwartz-Soicher O, Mincy RB (2012) Beyond absenteeism: father incarceration and child development. Demography 49(1):39–76

    Article  Google Scholar 

  13. Geller A, Garfinkel I, Cooper CE, Mincy RB (2009) Parental incarceration and child well-being: implications for urban families. Soc Sci Q 90(5):1186–1202

    Article  Google Scholar 

  14. Geller A, Garfinkel I, Western B (2006) The effects of incarceration on employment and wages: an analysis of the fragile families survey. Center for Research on Child Wellbeing working paper

  15. Grogger J (1992) Arrests, persistent youth joblessness, and black/white employment differentials. Rev Econ Stat 74(1):100–106

    Article  Google Scholar 

  16. Grogger J (1995) The effect of arrests on the employment and earnings of young men. Q J Econ 110(1):51–71

    Article  Google Scholar 

  17. Hao L, Naiman DQ (2007) Quantile Regression (No. 7). Sage Publications, Incorporated

  18. Holzer HJ (1999) What employers want: job prospects for less-educated workers. Russell Sage Foundation Publications

  19. Holzer H (2009) Collateral costs: effects of incarceration on employment and earnings among young workers. In Do prisons make us safer? The benefits and costs of the prison boom, edited by Raphael, S. and Stoll, M. A., 239–265

  20. Holzer HJ, Raphael S, Stoll MA (2004) Will Employers Hire Former Offenders? Employer Preferences, Background Checks, and Their Determinants. In Imprisoning America: The Social Effects of Mass Incarceration, edited by Pattillo, M. E., Weiman, D. F., and Western, B., 210–211

  21. Hutcherson DT (2012) Crime pays: the connection between time in prison and future criminal earnings. Prison J, 0032885512448607

  22. Kling JR (2006) Incarceration Length, Employment, and Earnings. National Bureau of Economic Research No. w12003

  23. Kling JR (1999) The Effect of Prison Sentence Length on the Subsequent Earnings and Employment of Criminal Defendants. Princeton discussion paper 208

  24. Koenker R (2004) Quantile Regression for Longitudinal Data. J Multivar Anal 91(1):74–89

    Article  Google Scholar 

  25. Koenker R, Bassett G Jr (1978) Regression Quantiles. Econometrica: Journal of the Econometric Society 46(1):33–50

    Article  Google Scholar 

  26. Koenker R, Hallock K (2001) Quantile Regression: An Introduction. J Econ Perspect 15(4):43–56

    Article  Google Scholar 

  27. Langan PA, Levin DJ (2002) Recidivism of prisoners released in 1994. Federal Sentencing Reporter 15(1):58–65

    Article  Google Scholar 

  28. Laub JH, Sampson RJ (1993) Turning points in the life course: why change matters to the study of crime. Criminology 31(3):301–325

    Article  Google Scholar 

  29. Lyons CJ, Pettit B (2011) Compounded disadvantage: race, incarceration, and Wage Growth. Soc Probl 58(2):257–280

    Article  Google Scholar 

  30. Mueller-Smith M (2015) The criminal and labor market impacts of incarceration. Working paper

  31. Nagin D, Waldfogel J (1998) The effect of conviction on income through the life cycle. Int Rev Law Econ 18(1):25–40

    Article  Google Scholar 

  32. Needels KE (1996) Go directly to jail and do not collect? A long-term study of recidivism, employment, and earnings patterns among prison Releasees. J Res Crime Delinq 33(4):471–496

    Article  Google Scholar 

  33. Pettit B, Lyons CJ (2007) Status and the Stigma of Incarceration: The Labor-Market Effects of Incarceration, by Race, Class, and Criminal Involvement. In Barriers to Reentry? The Labor Market for Released Prisoners in Post-Industrial America, 203–226

  34. Pettit B, Lyons CJ (2009) Incarceration and the legitimate labor market: examining age-graded effects on employment and wages. Law Soc Rev 43(4):725–756

    Article  Google Scholar 

  35. Pogrebin M, West-Smith M, Walker A, Unnithan NP (2014) Employment Isn’t enough financial obstacles experienced by ex-prisoners during the reentry process. Crim Justice Rev 39(4):394–410

    Article  Google Scholar 

  36. Ramakers A, van Wilsem J, Apel R (2012) The effect of labour market absence on finding employment: a comparison between ex-prisoners and unemployed future prisoners. Eur J Criminol 9(4):442–461

    Article  Google Scholar 

  37. Raphael S (2007) Early Incarceration Spells and the Transition to Adulthood. In The Price of Independence: The Economics of Early Adulthood, 278–305

  38. Raphael S (2010) Improving Employment Prospects For Former Prison Inmates: Challenges and Policy. NBER working paper 15874

  39. Sabol WJ (2007) Local labor-market conditions and post-prison employment experiences of offenders released from ohio state prisons. In Barriers to Reentry? The Labor Market for Released Prisoners in Post-Industrial America, 257–303

  40. Sampson R, Laub J (1997) A life-course theory of cumulative disadvantage and the stability of delinquency. In: Thornberry TP (ed) Developmental theories of crime and delinquency, vol 7. Transaction Publishers, Piscataway, pp 133–161

    Google Scholar 

  41. Turney K (2013) Liminal men: incarceration and family instability. Princeton University working paper

  42. Visher CA, Debus S, Yahner J (2008) Employment after prison: a longitudinal study of releases in three states. Urban Institute, Justice policy center

  43. Wakefield S, Uggen C (2010) Incarceration and stratification. Annu Rev Sociol 36:387–406

    Article  Google Scholar 

  44. Waldfogel J (1994) Does conviction have a persistent effect on income and employment? Int Rev Law Econ 14(1):103–119

    Article  Google Scholar 

  45. U.S. Department of Labor, Wage and Hour Division (2018) Wages and the Fair Labor Standards Act (FLSA) Overview. https://www.dol.gov/whd/flsa/. Accessed 8 Nov 2018

  46. Western B (2002) The impact of incarceration on wage mobility and inequality. Am Sociol Rev 67(4):526–546

    Article  Google Scholar 

  47. Western B, Beckett K (1999) How unregulated is the US labor market? The penal system as a labor market institution. Am J Sociol 104(4):1030–1060

    Article  Google Scholar 

  48. Western B, Kling JR, Weiman DF (2001) The labor market consequences of incarceration. Crime Delinq 47(3):410–427

    Article  Google Scholar 

  49. Western B, Pettit B (2000) Incarceration and racial inequality in Men's employment. Ind Labor Relat Rev 54(1):3–16

    Article  Google Scholar 

  50. Yang CS (2017) Local labor markets and criminal recidivism. J Public Econ 147:16–29

    Article  Google Scholar 

Download references

Author information

Affiliations

Authors

Corresponding author

Correspondence to Christian Brown.

Ethics declarations

Conflict of Interests

The author declares no conflicts of interests. The views of the author do not represent those of FDA.

Additional information

Publisher’s Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Appendix

Appendix

Table 7 Wage distribution of incarcerated respondents and observations
Table 8 Tests of interquantile and mean-quantile significance

Rights and permissions

Reprints and Permissions

About this article

Verify currency and authenticity via CrossMark

Cite this article

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

Download citation

Keywords

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

JEL

  • J15
  • J24
  • J31