Incarceration and Earnings: Distributional and Long-Term Effects

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.