1. The Effects of Time in Prison on Male Felons’ Employment and Earnings Haeil Jung University of Chicago 2007 Crime and Population Dynamics Summer Workshop June 4 th 2007

2. Research Question Does incarceration affect male felons’ employment outcomes? –Effects can be ambiguous. Reduction of social and economic assets –Effects can be positive. “Scared straight”: Katz, Levitt and Shustorovich (2003). Increasing punishment for repeat offenders –Effects can be negative. Deterioration of legal skills Improvement of illegal skills Stigma of incarceration

3. Main Findings The length of incarceration has a positive relationship with subsequent employment and earnings

4. Matched Administration Data Sample 35,954 men –Paroled to Cook County, Illinois –January 1995 - June 2003 –Age 18 to 64 –Before and after their first incarceration Matched administrative records: –Illinois Department of Correction (IDOC) Admission and exit dates, offenses, some demographics No Jail Data available –Illinois Department of Employment Security (IDES). Quarterly earnings histories in UI-covered jobs in Illinois. Main individual time-varying variables –Quarterly Employment and Earnings –Age –Timing of prison entry and exit

5. Characteristics of Parolees to Cook County Less than 12 years of schooling: ~ 59% Black: ~ 76% Average Release–Age: ~ 30 Quarterly Employment Rate: ~26% Quarterly Earnings: ~$1,000 Quarterly Earnings When Working: ~$3,000

6. Offense Types and Incarceration Length Incarceration Length (Year) Offence Categories PersonPropertyDrugAll Length < 0.520.4%34.6%49.3%36.4% 0.5<= Length <114.0%27.8%18.7%18.9% 1 <= Length <216.7%22.3%17.2%18.2% 2 <= Length48.9%15.4%14.9%26.5% Total100% Mean (St.D)2.51 (2.42)1.17 (1.32)1.03 (1.28)1.58 (1.95) Fraction of Offenses26.9%22%46.3%100%

12. Dynamic Aspects of Employment and Earnings of Felons Increase of earnings when working during the post-incarceration period Decrease of employment during the post- incarceration period Longer incarceration is associated with higher earnings and employment rate Problem with interpreting longitudinal pattern –Macroeconomic and policy changes –Cohort effect –Interaction between Time and Individual Characteristics

13. Statistical Model: Fixed Effects Regression with Huber-White Robust Variance-Covariance Estimation P i,l=2,τ=1 Incarceration Length 6 month to 1 year × Indicator of Post-Prison Quarter 1 to 8 P i,l=3,τ=1 Incarceration Length 1 year to 2 years × Indicator of Post-Prison Quarter 1 to 8 P i,l=4,τ=1 Incarceration Length 2 years and more × Indicator of Post-Prison Quarter 1 to 8 P i,l=2,τ=2 Incarceration Length 6 month to 1 year × Indicator of Post-Prison Quarter 9+ P i,l=3,τ=2 Incarceration Length 1 year to 2 years × Indicator of Post-Prison Quarter 9+ P i,l=4,τ=2 Incarceration Length 2 years and more × Indicator of Post-Prison Quarter 9+

14. *Significant at the 5% level Real Quarterly Earnings (1)(2)(3) Incarceration Length 6 month to 1 year× Indicator of Post-Prison Quarter 1 to 8 132.09147.5799.89 (30.40)* (33.72)* Incarceration Length 1 year to 2 years × Indicator of Post-Prison Quarter 1 to 8 260.95269.13179.56 (34.58)*(34.66)*(38.35)* Incarceration Length 2 years and more× Indicator of Post-Prison Quarter 1 to 8 552.06552.30383.27 (50.43)*(51.73)*(61.71)* Incarceration Length 6 month to 1 year× Indicator of Post-Prison Quarter 9+ 68.1292.5847.89 (34.73)*(34.70)*(38.20) Incarceration Length 1 year to 2 years × Indicator of Post-Prison Quarter 9+ 175.81192.4293.20 (38.23)*(38.52)*(42.88)* Incarceration Length 2 years and more× Indicator of Post-Prison Quarter 9+ 446.11465.30251.74 (53.70)*(55.84)*(66.54)* Relative Quarter IndicatorsYes Quarter IndicatorsYes Demographic Variables × Indicator of Relative PeriodsNoYes Holding Crime Classes × Indicator of Relative PeriodsNo Yes

15. Employment *Significant at the 5% level Quarterly Employment(1)(2)(3) Incarceration Length 6 month to 1 year× Indicator of Post-Prison Quarter 1 to 8 0.02550.03090.0175 (0.0058)* (0.0063)* Incarceration Length 1 year to 2 years × Indicator of Post-Prison Quarter 1 to 8 0.06210.06630.0415 (0.0066)*(0.0067)*(0.0073)* Incarceration Length 2 years and more× Indicator of Post-Prison Quarter 1 to 8 0.11030.11270.0639 (0.0088)*(0.0091)*(0.0110)* Incarceration Length 6 month to 1 year× Indicator of Post-Prison Quarter 9+ 0.00800.01490.0057 (0.0063)(0.0064)*(0.0069) Incarceration Length 1 year to 2 years × Indicator of Post-Prison Quarter 9+ 0.02960.03640.0163 (0.0071)*(0.0072)*(0.0079)* Incarceration Length 2 years and more× Indicator of Post-Prison Quarter 9+ 0.06780.07730.0292 (0.0092)*(0.0096)*(0.0116)* Relative Quarter IndicatorsYes Quarter IndicatorsYes Demographic Variables × Indicator of Relative PeriodsNoYes Holding Crime Classes × Indicator of Relative PeriodsNo Yes

16. *Significant at the 5% level Log of Real Quarterly Earnings (1)(2)(3) Incarceration Length 6 month to 1 year× Indicator of Post-Prison Quarter 1 to 8 0.15870.17180.1361 (0.0329)*(0.0333)*(0.0351)* Incarceration Length 1 year to 2 years × Indicator of Post-Prison Quarter 1 to 8 0.19260.20260.1371 (0.0367)*(0.0375)*(0.0409)* Incarceration Length 2 years and more× Indicator of Post-Prison Quarter 1 to 8 0.46410.46660.3643 (0.0457)*(0.0477)*(0.0584)* Incarceration Length 6 month to 1 year× Indicator of Post-Prison Quarter 9+ 0.10300.12960.0992 (0.0372)*(0.0375)*(0.0395)* Incarceration Length 1 year to 2 years × Indicator of Post-Prison Quarter 9+ 0.11600.14230.0741 (0.0411)*(0.0419)*(0.0456) Incarceration Length 2 years and more× Indicator of Post-Prison Quarter 9+ 0.35440.38190.2746 (0.0486)*(0.0512)*(0.0638)* Relative Quarter IndicatorsYes Quarter IndicatorsYes Demographic Variables × Indicator of Relative PeriodsNoYes Holding Crime Classes × Indicator of Relative PeriodsNo Yes

17. Findings Incarceration length –A positive relationship with employment and earnings –During 2 years right after incarceration, on average one to two years of incarceration compared to less than a half year of incarceration is associated with ~ $260 more earnings per quarter, ~ 6 percentage point higher employment and ~ 19 percentage point more earnings when working.

18. Thank You.

19. “Being in Prison Effect” vs “Time in Prison Effect” Earnings Time in Prison

20. Will labor Market consequences in informal sector be different? Earnings Time in Prison Formal Sector Informal Sector

21. Distribution of Incarceration Length across Different Offense Categories of Felons Offense Type PercentilesAllPersonPropertyDrug 100.170.320.180.17 250.380.650.400.19 500.851.940.780.52 752.113.471.381.28 903.935.642.542.47 Mean (St.D)1.58 (1.95)2.51 (2.42)1.17 (1.32)1.03 (1.28)

22. Offense Types Offense TypeNumberPercentMain Offenses Person966326.9 % robbery, battery, murder (or attempted murder)*, armed violence, home invasion, vehicular hijacking, possessing and using illegal arms Property789622 % burglary, auto theft, retail theft, document forgery, arson Drug1664246.3 % Sale or possession of illegal drugs, substance abuse, driving under influence of drug Sex15684.4 % sexual assault or abuse, rape, violation of sex offender registration Others1580.4 % Missing270.1 % Total35,954100 % * This count excludes first degree murder convictions.

23. Outcome Variables Relative Quarter -33 qtr to -9 qtr -8 qtr to -1 qtr 1 qtr to 8 qtr 9 qtr to 33 qtr MeanSt. DMeanSt. DMeanSt. DMeanSt. D Real Quarterly Earnings $ 1,0582,4017312,0299212,1929732,436 Employment0.320.460.250.430.280.450.240.42 Real Quarterly Earnings when Working $ 3,3813,2512,9503,1723,2763,0644,0913,492 Ln (Real Earnings)7.461.427.211.57.451.47.721.39

24. Real Quarterly Earnings(1)(2)(3)(4) Incarceration Length × Indicator of Pre-Prison Quarter -8 to -1 63.28 (55.06) Incarceration Length Squared × Indicator of Pre-Prison Quarter -8 to -1 -11.82 (14.67) Incarceration Length × Indicator of Post-Prison Quarter 1 to 8 308.01309.24211.30257.29 (34.20)*(34.37)*(40.52)*(63.19)* Incarceration Length Squared × Indicator of Post-Prison Quarter 1 to 8 -30.65-31.18-21.21-30.44 (7.93)*(7.89)*(8.50)*(16.14) Incarceration Length × Indicator of Post-Prison Quarter 9+ 278.23283.13167.77214.33 (34.99)*(35.23)*(41.53)*(63.77)* Incarceration Length Squared × Indicator of Post-Prison Quarter 9+ -29.72-30.18-19.26-28.54 (7.97)*(7.92)*(8.52)*(16.14) Relative Quarter IndicatorsYes Quarter IndicatorsYes Demographic VariablesNoYes Holding Crime Class ControlsNo Yes H0: The effect of incarceration length is consistent after incarceration.Reject *Significant at the 5% level Real Quarterly Earnings

25. Employment (1)(2)(3)(4) Incarceration Length × Indicator of Pre-Prison Quarter -8 to -1 0.01731 (0.00993) Incarceration Length Squared × Indicator of Pre-Prison Quarter -8 to -1 -0.00508 (0.00261) Incarceration Length × Indicator of Post-Prison Quarter 1 to 8 0.058160.063440.036990.05124 (0.00612)*(0.00621)*(0.00723)*(0.01123)* Incarceration Length Squared × Indicator of Post-Prison Quarter 1 to 8 -0.00435-0.00535-0.00260-0.00706 (0.00140)* (0.00150)(0.00286)* Incarceration Length × Indicator of Post-Prison Quarter 9+ 0.041080.048900.022520.03681 (0.00623)*(0.00634)*(0.00737)*(0.01133)* Incarceration Length Squared × Indicator of Post-Prison Quarter 9+ -0.00315-0.00432-0.00164-0.0061 (0.00141)* (0.00150)(0.00286)* Relative Quarter IndicatorsYes Quarter IndicatorsYes Demographic VariablesNoYes Holding Crime Class ControlsNo Yes H0: The effect of incarceration length is consistent after incarceration.Reject *Significant at the 5% level

26. Log of Real Quarterly Earnings(1)(2)(3)(4) Incarceration Length × Indicator of Pre-Prison Quarter -8 to -1 0.06221 (0.05026) Incarceration Length Squared × Indicator of Pre-Prison Quarter -8 to -1 -0.00930 (0.01258) Incarceration Length × Indicator of Post-Prison Quarter 1 to 8 0.265070.262420.187760.22945 (0.03579)*(0.03608)*(0.04167)*(0.05799)* Incarceration Length Squared × Indicator of Post-Prison Quarter 1 to 8 -0.02844-0.02699-0.01643-0.02290 (0.00887)*(0.00859)*(0.00914)(0.01437) Incarceration Length × Indicator of Post-Prison Quarter 9+ 0.236340.240960.163990.20625 (0.03654)*(0.03698)*(0.04291)*(0.05887)* Incarceration Length Squared × Indicator of Post-Prison Quarter 9+ -0.02797-0.02673-0.01606-0.0226 (0.00890)*(0.00863)*(0.00918)(0.01439) Relative Quarter IndicatorsYes Quarter IndicatorsYes Demographic VariablesNoYes Holding Crime Class ControlsNo Yes H0: The effect of incarceration length is consistent after incarceration.Reject Fail to Reject Fail to Reject Fail to Reject *Significant at the 5% level Log of Real Quarterly Earnings

27. Findings Incarceration length –A decreasing positive relationship with employment and earnings –During 2 years right after incarceration, on average two years of incarceration compared with one year of incarceration is associated with $147 more earnings per quarter, 3 percentage point higher employment and 13 percentage point more earnings when working

28. Statistical Model: Fixed Effects Regression with Huber-White Robust Variance-Covariance Estimation