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Effect of Employer Access to Criminal History Data on the Labor Market Outcomes of Ex-Offenders and Non-Offenders

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  • Keith Finlay

Abstract

Since 1997, states have begun to make criminal history records publicly available over the Internet. This paper exploits this previously unexamined variation to identify the effect of expanded employer access to criminal history data on the labor market outcomes of ex-offenders and non-offenders. Employers express a strong aversion to hiring ex-offenders, but there is likely asymmetric information about criminal records. Wider availability of criminal history records should adversely affect the labor market outcomes of ex-offenders. A model of statistical discrimination also predicts that non-offenders from groups with high rates of criminal offense should have improved labor market outcomes when criminal history records become more accessible. This paper tests these hypotheses with criminal and labor market histories from the 1997 cohort of the National Longitudinal Survey of Youth. I find evidence that labor market outcomes are worse for ex-offenders once state criminal history records become available over the Internet. Non-offenders from highly offending groups do not appear, however, to have significantly better labor market outcomes. The sign of the non-offenders estimates are consistent with the predictions of the statistical discrimination model, but the estimates are not significantly different from zero. These estimates may be confounded by a short sample period and ongoing human capital investments, but the research design provides a unique setting for testing theories of statistical discrimination.

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  • Keith Finlay, 2008. "Effect of Employer Access to Criminal History Data on the Labor Market Outcomes of Ex-Offenders and Non-Offenders," NBER Working Papers 13935, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:13935
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    References listed on IDEAS

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    8. Jeffrey R. Kling, 2006. "Incarceration Length, Employment, and Earnings," American Economic Review, American Economic Association, vol. 96(3), pages 863-876, June.
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    12. Hjalmarsson, Randi, 2008. "Criminal justice involvement and high school completion," Journal of Urban Economics, Elsevier, vol. 63(2), pages 613-630, March.
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    Cited by:

    1. Abigail Wozniak, 2015. "Discrimination and the Effects of Drug Testing on Black Employment," The Review of Economics and Statistics, MIT Press, vol. 97(3), pages 548-566, July.
    2. Mueller-Smith, Michael & Schnepel, Kevin T., 2016. "Avoiding Convictions: Regression Discontinuity Evidence on Court Deferrals for First-Time Drug Offenders," IZA Discussion Papers 10409, Institute of Labor Economics (IZA).
    3. David Neumark, 2016. "Experimental Research on Labor Market Discrimination," NBER Working Papers 22022, National Bureau of Economic Research, Inc.
    4. Dara N. Lee, 2011. "The Digital Scarlet Letter: The Effect of Online Criminal Records on Crime," Working Papers 1118, Department of Economics, University of Missouri.
    5. Jennifer L. Doleac & Benjamin Hansen, 2016. "Does “Ban the Box” Help or Hurt Low-Skilled Workers? Statistical Discrimination and Employment Outcomes When Criminal Histories are Hidden," NBER Working Papers 22469, National Bureau of Economic Research, Inc.
    6. Richey, Jeremiah, 2015. "Shackled labor markets: Bounding the causal effects of criminal convictions in the U.S," International Review of Law and Economics, Elsevier, vol. 41(C), pages 17-24.
    7. Edward L. Glaeser & Scott Duke Kominers & Michael Luca & Nikhil Naik, 2018. "Big Data And Big Cities: The Promises And Limitations Of Improved Measures Of Urban Life," Economic Inquiry, Western Economic Association International, vol. 56(1), pages 114-137, January.
    8. Diaz, Ana Maria & Salas, Luz Magdalena, 2020. "Do firms redline workers?," Regional Science and Urban Economics, Elsevier, vol. 83(C).
    9. Kevin T. Schnepel, 2018. "Good Jobs and Recidivism," Economic Journal, Royal Economic Society, vol. 128(608), pages 447-469, February.
    10. Sriram Chintakrindi & Jeremy Porter & Chunrye Kim & Suditi Gupta, 2015. "An Examination of Employment and Earning Outcomes of Probationers With Criminal and Substance Use Histories," SAGE Open, , vol. 5(4), pages 21582440156, December.
    11. Steven J. Davis & John Haltiwanger, 2014. "Labor Market Fluidity and Economic Performance," NBER Working Papers 20479, National Bureau of Economic Research, Inc.
    12. Richey, Jeremiah, 2012. "The Causal Effects of Criminal Convictions on Labor Market Outcomes in Young Men: A Nonparametric Bounds Analysis," MPRA Paper 56112, University Library of Munich, Germany.
    13. Nicolás Grau & Gonzalo Marivil & Jorge Rivera, 2019. "The Effect of Pretrial Detention on Labor Market Outcomes," Working Papers wp488, University of Chile, Department of Economics.
    14. Robert Clifford & Daniel Shoag, 2016. "“No more credit score”: employer credit check bans and signal substitution," Working Papers 16-10, Federal Reserve Bank of Boston.
    15. Ballance, Joshua & Clifford, Robert & Shoag, Daniel, 2020. "“No more credit score”: Employer credit check bans and signal substitution," Labour Economics, Elsevier, vol. 63(C).
    16. Mueller-Smith, Michael & Schnepel, Kevin T., 2016. "Avoiding Convictions: Regression Discontinuity Evidence on Court Deferrals for First-Time Drug Offenders," Working Papers 2016-16, University of Sydney, School of Economics.

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    More about this item

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
    • J78 - Labor and Demographic Economics - - Labor Discrimination - - - Public Policy (including comparable worth)
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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