Revisiting the Lasting Impacts of Incarceration

John Humphries, Cecile Macaire, Aurelie Ouss, Megan Stevenson and Winnie Van Dijk

No 20288, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Using newly-linked administrative and commercial data from Virginia spanning 25 years, we study the consequences of incarceration. While previous research has examined labor market outcomes and recidivism, we focus on two of the primary channels through which low-income households build wealth: asset ownership (homes and cars) and human capital formation. To identify causal effects, we use a matched difference-in-differences design. In line with much of the literature on the impact of incarceration in the U.S., we find no evidence of scarring effects on labor market outcomes or changes in recidivism beyond the incapacitation period. However, we find that incarceration leads to a persistent reduction in asset accumulation: seven years after sentencing, homeownership has declined by 1.1 percentage points (12.1%) and car ownership by 2.7 percentage points (18.1%). Incarceration also lowers human capital formation, reducing college enrollment by 1.4 percentage points (15.1%).

Keywords: Incarceration (search for similar items in EconPapers)
JEL-codes: J24 K42 (search for similar items in EconPapers)
Date: 2025-05
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