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Employment and wages before and after incarceration – evidence from Hungary

Bence Czafit () and János Köllő ()

IZA Journal of European Labor Studies, 2015, vol. 4, issue 1, 1-21

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

Keywords: Incarceration; Prison effects; Unemployment; Wage loss; Discrimination; K42; J64; J39 (search for similar items in EconPapers)
Date: 2015
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