The Impact of Incarceration on Employment, Earnings, and Tax Filing

72 Pages Posted: 10 Aug 2023

See all articles by Andrew Garin

Andrew Garin

The University of Illinois at Urbana-Champaign

Dmitri Koustas

University of Chicago

Carl McPherson

University of California, Berkeley - Department of Economics

Samuel Norris

University of Chicago

Matthew Pecenco

University of California, Berkeley

Evan K. Rose

University of Chicago

Yotam Shem-Tov

University of California, Los Angeles (UCLA)

Jeffrey Weaver

University of Southern California

Date Written: August 9, 2023

Abstract

We study the effect of incarceration on wages, self-employment, and taxes and transfers in North Carolina and Ohio using two quasi-experimental research designs: discontinuities in sentencing guidelines and random assignment to judges. Across both states, incarceration generates short-term drops in economic activity while individuals remain in prison. As a result, a year-long sentence decreases cumulative earnings over five years by 13%. Beyond five years, however, there is no evidence of lower employment, wage earnings, or self-employment in either state, as well as among defendants with no prior incarceration history. These results suggest that upstream factors, such as other types of criminal justice interactions or pre-existing labor market detachment, are more likely to be the cause of low earnings among the previously incarcerated, who we estimate would earn $5,000 per year on average if spared a prison sentence.

Suggested Citation

Garin, Andrew and Koustas, Dmitri and McPherson, Carl and Norris, Samuel and Pecenco, Matthew and Rose, Evan K. and Shem-Tov, Yotam and Weaver, Jeffrey, The Impact of Incarceration on Employment, Earnings, and Tax Filing (August 9, 2023). University of Chicago, Becker Friedman Institute for Economics Working Paper No. 2023-108, Available at SSRN: https://ssrn.com/abstract=4536659 or http://dx.doi.org/10.2139/ssrn.4536659

Andrew Garin

The University of Illinois at Urbana-Champaign ( email )

Dmitri Koustas

University of Chicago ( email )

1101 East 58th Street
Chicago, IL 60637
United States

Carl McPherson

University of California, Berkeley - Department of Economics ( email )

579 Evans Hall
Berkeley, CA 94709
United States

Samuel Norris

University of Chicago ( email )

1155 East 60th Street
Chicago, IL 60637
United States

Matthew Pecenco

University of California, Berkeley ( email )

310 Barrows Hall
Berkeley, CA 94720
United States

Evan K. Rose (Contact Author)

University of Chicago ( email )

1101 East 58th Street
Chicago, IL 60637
United States

Yotam Shem-Tov

University of California, Los Angeles (UCLA) ( email )

405 Hilgard Avenue
Box 951361
Los Angeles, CA 90095
United States

Jeffrey Weaver

University of Southern California

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