The Labor Market Consequences of Incarceration

Abstract

Rapid growth in the incarceration rate over the last two decades has made prison time a routine event in the life course of young economically disadvantaged, black and Hispanic men. Although incarceration may now have large effects on economic inequality, only a few studies systematically examine the labor market experiences of ex-offenders. We review the mechanisms that plausibly link incarceration to employment and earnings and discuss the challenges of causal inference for a highly self-selected sample of criminal offenders. There is little consensus about the labor market effects of a variety of justice system sanctions, but there is consistent evidence for the negative effects of prison time on earnings, particularly among older or white-collar offenders. The labor market effects of incarceration are not yet well understood, but prior research suggests several promising avenues for future work.