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Dynamics of Deterrence: A Macroeconomic Perspective on Punitive Justice Policy

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Abstract

We argue that transitional dynamics play a critical role in the evaluation of punitive incarceration reform on crime, inequality and the macroeconomy. Individuals’ past choices related to crime and employment under old policies have persistent consequences that limit their future responses to policy changes. Novel cohort evidence is provided in support of this mechanism. A quantitative model of this theory calibrated using restricted administrative data predicts nuanced, non-monotone dynamics of crime and incarceration similar to the U.S. experience following a single permanent increase in punitive incarceration in the 1980s. Increased inequality and declining employment accompany these changes and are borne unequally across generations.

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  • Bulent Guler & Amanda Michaud, 2018. "Dynamics of Deterrence: A Macroeconomic Perspective on Punitive Justice Policy," University of Western Ontario, Centre for Human Capital and Productivity (CHCP) Working Papers 20186, University of Western Ontario, Centre for Human Capital and Productivity (CHCP).
    • Handle: RePEc:uwo:hcuwoc:20186
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    Cited by:

    1. Wolcott, Erin L., 2021. "Employment inequality: Why do the low-skilled work less now?," Journal of Monetary Economics, Elsevier, vol. 118(C), pages 161-177.
    2. 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.
    3. Guner, Nezih & Caucutt, Elizabeth & Rauh, Christopher, 2018. "Is Marriage for White People? Incarceration, Unemployment, and the Racial Marriage Divide," CEPR Discussion Papers 13275, C.E.P.R. Discussion Papers.
    4. Kartik B. Athreya & Grey Gordon & John Bailey Jones & Urvi Neelakantan, 2021. "Incarceration, Earnings, and Race," Working Paper 21-11`, Federal Reserve Bank of Richmond.

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    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E69 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Other

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