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Incarceration, Employment and Earnings: Dynamics and Differences

Author

Listed:
  • Grey Gordon

    (Federal Reserve Bank of Richmond)

  • John B. Jones

    (Federal Reserve Bank of Richmond)

  • Urvi Neelakantan

    (Federal Reserve Bank of Richmond)

  • Kartik Athreya

    (Federal Reserve Bank of Richmond)

Abstract

We study the dynamics of incarceration, employment, and earnings. Our hidden Markov model distinguishes between first-time and repeat incarceration, between persistent and transitory nonemployment and earnings risks, and accounts for nonresponse bias. We estimate the model via maximum likelihood using the National Longitudinal Survey of Youth 1979, accounting for the large differences in incarceration rates by race, education level, and gender. First-time incarceration is associated with 33% (50%) lower expected lifetime earnings and 6 (10) fewer years of employment for Black (White) men with a high school degree. Among less-educated men, differences in incarceration and nonemployment can explain around half the Black-White lifetime earnings gap. (Copyright: Elsevier)

Suggested Citation

  • Grey Gordon & John B. Jones & Urvi Neelakantan & Kartik Athreya, 2023. "Incarceration, Employment and Earnings: Dynamics and Differences," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 51, pages 677-697, December.
    • Handle: RePEc:red:issued:21-319
    DOI: 10.1016/j.red.2023.06.007
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    Cited by:

    1. Qi Li & Cynthia G. Colen, 2024. "Racial Disparities in the Relationship Between Parental Incarceration and Childhood Obesity," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 43(4), pages 1-22, August.
    2. Hope Bodenschatz & Gerald Eric Daniels Jr. & Jeffrey P. Thompson, 2023. "Decomposing Lifetime-Earnings Differences between White, Black, and Hispanic Families," Working Papers 23-14, Federal Reserve Bank of Boston.

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    More about this item

    Keywords

    earnings dynamics; incarceration; racial inequality;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination

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