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Incarceration and Low Skilled Labor Markets: A Macroeconomic Analysis

Author

Listed:
  • Amanda Michaud

    (Indiana University)

  • Bulent Guler

    (Indiana University - Bloomington)

Abstract

Between 1980 and 2005, the incarceration rate in the United States increased fourfold. At this level, 6.6% of the population will be imprisoned for a year or more during their lifetime. We provide a comprehensive analysis of the eects of increased incarceration rates on all actors in labor markets: criminals, non-criminals, and employers. To do so, we expand a search and matching model to include incarceration. Incarceration has two direct eects: (1) it interrupts employment relationships; and (2) it deteriorates human capital. We estimate the model by indirect inference using variation in incarceration rates across demographic groups. Simulating our model will allow us to measure the eect incarceration has had on broad labor market trends and to predict future eects for dierent policy scenarios.

Suggested Citation

  • Amanda Michaud & Bulent Guler, 2014. "Incarceration and Low Skilled Labor Markets: A Macroeconomic Analysis," 2014 Meeting Papers 859, Society for Economic Dynamics.
    • Handle: RePEc:red:sed014:859
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