The Minimum Wage, EITC, and Criminal Recidivism
70 Pages Posted: 12 Jan 2018 Last revised: 17 Aug 2020
Date Written: September 25, 2018
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: Suggested Citation