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How Do Firms Deal with the Risks of Employing Ex-prisoners?

Author

Listed:
  • Köllő, János

    (Institute of Economics, Budapest)

  • Boza, István

    (Centre for Economic and Regional Studies)

  • Ilyés, Virág

    (HUN-REN Centre for Economic and Regional Studies)

  • Kőműves, Zsófia

    (Cambridge Economic Policy Associates)

  • Mark, Lili Katalin

    (Central European University, Budapest)

Abstract

We use linked employer-employee data to investigate a large sample of past and future prisoners in Hungary, 2003-2011. We first compare their jobs, focusing on attributes that can reduce the penalty the employer must pay for a mistaken hiring decision. Second, we study if employers insure themselves by paying lower wages to ex-prisoners. Third, we analyze whether the probability of the match dissolving within a few months is lower if the firm could potentially base its hiring decision on referrals. The composition of former prisoners' employment is biased toward easy-to-cancel jobs. In the unskilled jobs held by most of them, they do not earn less than future convicts, but a minority in white-collar positions are paid significantly less. Ex-prisoners' jobs are less likely to dissolve quickly if the hiring firm potentially had access to co-worker, employer, or labor office referrals.

Suggested Citation

  • Köllő, János & Boza, István & Ilyés, Virág & Kőműves, Zsófia & Mark, Lili Katalin, 2023. "How Do Firms Deal with the Risks of Employing Ex-prisoners?," IZA Discussion Papers 16645, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp16645
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    incarceration; reintegration; mobility; discrimination; Hungary;
    All these keywords.

    JEL classification:

    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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