Over the past several decades, incarceration rates have risen dramatically in many Organisation for Economic Co-operation and Development (OECD) countries.
In the United States, the incarceration rate has increased from 220 per 100,000 residents in 1980 to more than 700 per 100,000 in 2012. In Europe, the increases (and levels) tend to be smaller but still substantial, with the average incarceration rate per 100,000 residents rising from 62 in 1980 to 112 in 2010 in Western European nations. These increases raise important questions about how well ex-convicts reintegrate into society after incarceration, and in particular, whether they return to a life of crime.
Prison time could convince offenders that crime does not pay, or rehabilitate them by providing vocational and life skills training. Conversely, prison time could cause human capital to depreciate, expose offenders to hardened criminals, or limit opportunities due to employment discrimination or societal stigma.
Indeed, the effects of incarceration could vary in magnitude and sign depending on a prisoner’s background (e.g., work history), as well as prison conditions (e.g., availability of prison programs and sentence lengths).
While it is true that incarceration lowers the probability of reoffending within five years by 27 percentage points and reduces the corresponding number of criminal charges per individual by 10, the reduction in crime is driven by individuals who were not working prior to incarceration.
Among these individuals, imprisonment increases participation in programs directed at improving employability and reducing recidivism, and ultimately, raises employment and earnings while discouraging criminal behavior. Imprisonment causes a 34 percentage point increase in participation in job training programs for the previously non-employed, and within five years, their employment rate increases by 40 percentage points. At the same time, the likelihood of reoffending within five years is cut in half (by 46 percentage points), and the average number of criminal charges falls by 22.
A very different pattern emerges for individuals who were previously attached to the labor market. Among this group, there is no significant effect of incarceration on either the probability of reoffending or the number of charged crimes. Moreover, they experience an immediate 25 percentage point drop in employment due to incarceration, and this effect continues out to five years. This drop is driven almost entirely by defendants losing their jobs with their previous employers while they are in prison.
These negative effects may well offset any positive impacts of rehabilitation, and therefore help explain why incarceration does not seem to materially affect their criminal behavior or labor market outcomes.