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Conviction, Partial Adverse Selection and Labour Market Discrimination

  • Dario Sciulli

    ()

This paper analyses data from the 6th sweep of National Child Development Study to investigate the labour market perspective of convicted individuals. Decomposition analysis makes it clear that convicted workers are actually discriminated against both in terms of employment and wage with respect to non-convicted. Adopting a simple theoretical model accounting for partial adverse selection problem in the hiring process, I show that discrimination is not only explained in terms of economic stigma but also may derive from the inefficiency of the police/justice system in detecting crime and punishing offenders. In fact, while firms may apply economic stigma to recover the expected extracosts from hiring convicted workers, firms rationality may impose to charge on convicted workers also unobservable expected extra-costs deriving from offenders non-convicted hired. The resulting over-stigma is increasing with the probability of offending and with the level of expected extra-costs, while it is decreasing with the probability of convicting offenders.

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Paper provided by Department of Economics, University of Siena in its series Department of Economics University of Siena with number 594.

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Date of creation: May 2010
Handle: RePEc:usi:wpaper:594
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  1. Oaxaca, Ronald, 1973. "Male-Female Wage Differentials in Urban Labor Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October.
  2. Rasmusen, Eric, 1996. "Stigma and Self-Fulfilling Expectations of Criminality," Journal of Law and Economics, University of Chicago Press, vol. 39(2), pages 519-43, October.
  3. Cotton, Jeremiah, 1988. "On the Decomposition of Wage Differentials," The Review of Economics and Statistics, MIT Press, vol. 70(2), pages 236-43, May.
  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 451-80, October.
  5. Alan S. Blinder, 1973. "Wage Discrimination: Reduced Form and Structural Estimates," Journal of Human Resources, University of Wisconsin Press, vol. 8(4), pages 436-455.
  6. Reimers, Cordelia W, 1983. "Labor Market Discrimination against Hispanic and Black Men," The Review of Economics and Statistics, MIT Press, vol. 65(4), pages 570-79, November.
  7. Jeffrey Grogger, 1995. "The Effect of Arrests on the Employment and Earnings of Young Men," The Quarterly Journal of Economics, Oxford University Press, vol. 110(1), pages 51-71.
  8. Oaxaca, Ronald L. & Ransom, Michael R., 1994. "On discrimination and the decomposition of wage differentials," Journal of Econometrics, Elsevier, vol. 61(1), pages 5-21, March.
  9. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
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