In personal injury and fatal accident claims, the courts are often required to determine what effect a criminal record would have had on the earnings of the plaintiff. We suspect that most individuals would expect that criminals will have lower wages and higher unemployment rates than the average citizen.
In this paper, we summarise the most reliable research that has been conducted into this question. We divide this summary into four lines of investigation: the impact of incarceration on earnings and employment; the effect of an increase in the duration of incarceration; the determinants of a successful transition from jail to civilian life; and the determinants of the probability of recidivism.
Although the raw data indicate that those who have been incarcerated have lower earnings and higher unemployment rates than those who have no criminal record, research indicates that this is an example of “correlation, not causation.” (For further information on the misuse of statistics in legal proceedings, see Bruce, 2004.) That is, careful analysis of the data have shown that individuals with low earnings and high unemployment rates are more likely to commit (and be convicted of committing) crimes than are those with high earnings and low unemployment rates. Hence, the primary reason that earnings are low among those who have been incarcerated is that those individuals are drawn from a population of individuals who have low earnings, not because the incarceration changed their employment prospects.
Grogger (1995), for example, found that neither arrests nor jail terms had long term effects on the earnings or employment of young men. And Kling (1999) concluded that, for most individuals, incarceration only reduced earnings by 0 to 3 percent, five to eight years after release. The only group for whom incarceration had a significant effect on post-release earnings was white collar criminals (such as accountants and stockbrokers). Similarly, Richey (2015) found that the effect of conviction on earnings was small or zero. Western (2002), however, found that although conviction had no effect on employability, it reduced the rate of growth of earnings by approximately 33 percent. (Note, however, that as rates of growth are often approximately two or three percent per year, a 33 percent reduction implies a reduction in rate of growth of approximately one percent or less.)
Duration of incarceration
A number of recent articles have attempted to determine whether an increase in the length of a jail sentence, holding the severity of the crime constant, has an effect on post-incarceration employment and earnings. One study found that there “…. is no substantial evidence of a negative effect of incarceration length on employment or earnings.” (Kling, 2006) Another found that the length of prison sentence for drug offences had no significant effect on earnings; but that length of sentence had a very significant effect with respect to incarceration for fraud and embezzlement. (Lott, 1992)
Transition from prison into the workplace
A small number of studies have investigated the factors that influence the success of transition out of prison. Typical of these is Visher and Travis (2003) in which the authors found that men with close ties to families and friends made the most successful transitions into the workplace, particularly if they lived with their wives and children. Families appeared to be especially important if they provided emotional support and housing assistance.
Numerous studies – e.g. Gendreau et. al. (1996), Jones (2005), and Motiuk and Vuong (2005) – have concluded that those who have been released from prison are more likely to reoffend if they have experienced high levels of unemployment or job instability, lack a skill or trade, or are drug users. They are also more likely to reoffend the younger they are.
The finding that it is younger individuals who are most likely to re-offend implies that most offenders have left the criminal population by the time they are in their late 20s. One Canadian study (Correctional Service of Canada, 1993), found that, at age 32, the average age at which respondents had committed their last offence was 23. A subsequent study (Ouimet and LeBlanc, 1996), based on interviews with 238 young men who had previously been young offenders, found that whereas more than half had been criminally active between the ages of 18 to 25, only 18 percent had been criminally active after 25.
The scientific literature suggests that incarceration has a relatively small effect on lifetime earnings. Although those who have been incarcerated earn lower incomes than those who have not been incarcerated, it is primarily because they are drawn from a group that tends to have relatively low earnings, not because the incarceration “causes” low earnings. Further, the data appear to indicate that the likelihood of being convicted and sent to jail decreases as an individual ages. Hence, those 30 and 40 year olds who were incarcerated in their early 20s are not likely to become repeat offenders.
It appears, therefore, that once a plaintiff reaches the age of approximately 25, the best predictors of his future earnings are standard factors like earnings history, education, and occupation. Whether or not that individual has been incarcerated will not add a significant amount of information to the factors that are used to forecast earnings of non-incarcerated individuals.
- Bruce, Christopher, (2004) “The Reliability of Statistical Evidence Concerning the Impact of Disability;” Expert Witness, 9(4), http://www.economica.ca/ew09_4p1.htm.
- Correctional Service of Canada, (1993) “Recidivists tend to be…;” Forum on Corrections Research, 5(3).
- Gentreau, P. et. al. (1979) “Norms and recidivism for first incarcerates: Implications for programming;” Canadian Journal of Criminology, 1-26.
- Grogger, J. (1995) “The effect of arrests on the employment and earnings of young men;” Quarterly Journal of Economics, 51-71.
- Jones, D. (2005) “Offender employment: A research summary;” Forum on Corrections Research, 17(1), 13-20.
- Kling, J. (1999) “The effect of prison sentence length on the subsequent employment and earnings of criminal defendants;” Woodrow Wilson School Discussion Papers in Economics.
- Kling, J (2006) “Incarceration length, employment, and earnings;” American Economic Review, 863-876.
- Lott, J (1992) “Do we punish high income criminals too heavily?;” Economic Inquiry, 583-608.
- Motiuk, L, and B. Vuong (2005), “Offender employment: What the research tells us;” Forum on Corrections Research, 17(1), 21-24.
- Ouimet, M., and M. LeBlanc (1996) “Life events in the course of the adult criminal career;” Criminal Behavior and Mental Health, 6(1), 75-97.
- Richey, J. (2015) “Shackled labor markets: Bounding the causal effects of criminal convictions in the U.S.;” International Review of Law and Economics, 41, 17-24.
- Visher, C., and J. Travis (2003) “Transitions from prison to community: Understanding individual pathways;” Annual Review of Sociology, 29, 89-113.
- Western, B. (2002) “The impact of incarceration on wage mobility and inequality;” American Sociological Association, 4, 526-546.