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The High Budgetary Cost of Incarceration

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  • John Schmitt
  • Kris Warner

Abstract

We use Bureau of Justice Statistics data to estimate that, in 2008, the United States had between 12 and 14 million ex-offenders of working age. Because a prison record or felony conviction greatly lowers ex-offenders’ prospects in the labor market, we estimate that this large population lowered the total male employment rate that year by 1.5 to 1.7 percentage points. In GDP terms, these reductions in employment cost the U.S. economy between $57 and $65 billion in lost output.

Suggested Citation

  • John Schmitt & Kris Warner, 2010. "The High Budgetary Cost of Incarceration," CEPR Reports and Issue Briefs 2010-28, Center for Economic and Policy Research (CEPR).
    • Handle: RePEc:epo:papers:2010-28
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    References listed on IDEAS

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    1. Devah Pager, 2003. "The mark of a criminal record," Natural Field Experiments 00319, The Field Experiments Website.
    2. John Schmitt & Kris Warner & Sarika Gupta, 2010. "The High Budgetary Cost of Incarceration," CEPR Reports and Issue Briefs 2010-14, Center for Economic and Policy Research (CEPR).
    3. Holzer, Harry J., 2007. "Collateral Costs: The Effects of Incarceration on the Employment and Earnings of Young Workers," IZA Discussion Papers 3118, Institute of Labor Economics (IZA).
    4. Holzer, Harry J & Raphael, Steven & Stoll, Michael A, 2006. "Perceived Criminality, Criminal Background Checks, and the Racial Hiring Practices of Employers," Journal of Law and Economics, University of Chicago Press, vol. 49(2), pages 451-480, October.
    5. Jeffrey R. Kling, 2006. "Incarceration Length, Employment, and Earnings," American Economic Review, American Economic Association, vol. 96(3), pages 863-876, June.
    6. Cho, Rosa & LaLonde, Robert J., 2005. "The Impact of Incarceration in State Prison on the Employment Prospects of Women," IZA Discussion Papers 1792, Institute of Labor Economics (IZA).
    7. Richard B. Freeman, 1991. "Crime and the Employment of Disadvantaged Youths," NBER Working Papers 3875, National Bureau of Economic Research, Inc.
    8. Harry J. Holzer & Steven Raphael & Michael A. Stoll, 2001. "Will Employers Hire Ex-Offenders? Employer Preferences, Background Checks, and Their Determinants," JCPR Working Papers 238, Northwestern University/University of Chicago Joint Center for Poverty Research.
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    Cited by:

    1. John Schmitt & Kris Warner, 2010. "The High Budgetary Cost of Incarceration," CEPR Reports and Issue Briefs 2010-28, Center for Economic and Policy Research (CEPR).
    2. Mitchell Polinsky, A., 2015. "Deterrence and the optimality of rewarding prisoners for good behavior," International Review of Law and Economics, Elsevier, vol. 44(C), pages 1-7.
    3. Florian Baumann & Tim Friehe, 2013. "Cheap Talk About The Detection Probability," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 15(01), pages 1-16.
    4. Cherrie Bucknor & Alan Barber, 2016. "The Price We Pay: Economic Costs of Barriers to Employment for Former Prisoners and People Convicted of Felonies," CEPR Reports and Issue Briefs 2016-07, Center for Economic and Policy Research (CEPR).
    5. David Dagan & Steven M. Teles, 2014. "Locked In? Conservative Reform and the Future of Mass Incarceration," The ANNALS of the American Academy of Political and Social Science, , vol. 651(1), pages 266-276, January.
    6. Matthew E.K. Hall, 2017. "Macro Implementation: Testing the Causal Paths from U.S. Macro Policy to Federal Incarceration," American Journal of Political Science, John Wiley & Sons, vol. 61(2), pages 438-455, April.
    7. Kegon Teng Kok Tan & Mariyana Zapryanova, 2019. "The Role of Prison in Recidivism," Working Papers 2019-083, Human Capital and Economic Opportunity Working Group.
    8. John Schmitt & Janelle Jones, 2012. "Long-term Hardship in the Labor Market," CEPR Reports and Issue Briefs 2012-09, Center for Economic and Policy Research (CEPR).
    9. Katherine Eriksson, 2015. "Access to Schooling and the Black-White Incarceration Gap in the Early 20th Century US South: Evidence from Rosenwald Schools," NBER Working Papers 21727, National Bureau of Economic Research, Inc.
    10. John Schmitt & Janelle Jones, 2012. "Down and Out," Challenge, Taylor & Francis Journals, vol. 55(3), pages 5-20.

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    More about this item

    Keywords

    incarceration; ex-offenders; ex-felons; employment; labor; economics; prisoners;
    All these keywords.

    JEL classification:

    • E - Macroeconomics and Monetary Economics
    • H - Public Economics
    • K - Law and Economics
    • K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • J - Labor and Demographic Economics
    • J1 - Labor and Demographic Economics - - Demographic Economics
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J7 - Labor and Demographic Economics - - Labor Discrimination

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