The Minimum Wage, EITC, and Criminal Recidivism

70 Pages Posted: 12 Jan 2018 Last revised: 17 Aug 2020

See all articles by Amanda Y. Agan

Amanda Y. Agan

Rutgers University, Department of Economics

Michael D. Makowsky

Clemson University - John E. Walker Department of Economics

Date Written: September 25, 2018

Abstract

For released prisoners, the minimum wage and Earned Income Tax Credits (EITCs) can influence their ability to find employment and their potential wages relative to illegal sources of income, affecting the probability they return to prison. Using administrative prison release records from nearly six million offenders released between 2000 and 2014, we identify the effect of over two hundred minimum wage increases, as well as 21 state EITC programs, on recidivism. We find that a minimum wage increase of $0.50 reduces the probability an individual returns to prison within 1 year by 2.7%. This implies that on average the effect of higher wages, drawing at least some released prisoners into the legal labor market, dominates any disemployment effects. Reductions in returns to incarceration are observed for property and drug crimes; prison reentry for violent crimes are unchanged. The availability of state EITCs also reduces recidivism, but only for women.

Keywords: criminal recidivism, minimum wage, earned income tax credit

JEL Classification: J22, J23, J38, K14, K40

Suggested Citation

Agan, Amanda Y. and Makowsky, Michael D., The Minimum Wage, EITC, and Criminal Recidivism (September 25, 2018). Available at SSRN: https://ssrn.com/abstract=3097203 or http://dx.doi.org/10.2139/ssrn.3097203

Amanda Y. Agan

Rutgers University, Department of Economics ( email )

New Jersey Hall
75 Hamilton St
08901, NJ Princeton 08540
United States

HOME PAGE: http://https://sites.google.com/site/amandayagan/

Michael D. Makowsky (Contact Author)

Clemson University - John E. Walker Department of Economics ( email )

Clemson, SC 29634
United States

HOME PAGE: http://michaelmakowsky.com

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