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Employment and wages before and after incarceration – evidence from Hungary

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  • Bence Czafit
  • János Köllő

Abstract

We study the entry into legitimate employment and earnings of a large sample of convicts released from Hungarian prisons in 2002–08. The employment rate of the prisoners falls short of 20% one year before incarceration, and they earn 25% below the national average. We identify the effect of prison by exploiting differences in the timing of incarceration and also by estimating fixed-effect models. For convicts with a single prison term, we find an initially negative effect on employment, which turns positive after a year, though the impact on earnings is permanently negative. A comparison with recidivists suggests that these results are driven by a drop in the reservation wages of ‘reformed’ criminals. This reading is supported by further data showing that the average ex-inmate tends to make increased efforts to find a legitimate source of livelihood and support in job search. Copyright Czafit and Köllő. 2015

Suggested Citation

  • Bence Czafit & János Köllő, 2015. "Employment and wages before and after incarceration – evidence from Hungary," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-21, December.
    • Handle: RePEc:spr:izaels:v:4:y:2015:i:1:p:1-21:10.1186/s40174-015-0044-z
    DOI: 10.1186/s40174-015-0044-z
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    Cited by:

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    2. Köllö, János & Boza, István & Balázsi, László, 2021. "Wage gains from foreign ownership: evidence from linked employer-employee data," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 55, pages 1-3.

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    More about this item

    Keywords

    Incarceration; Prison effects; Unemployment; Wage loss; Discrimination; K42; J64; J39;
    All these keywords.

    JEL classification:

    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J39 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Other

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