What is Giving Compass?
We connect donors to learning resources and ways to support community-led solutions. Learn more about us.
Giving Compass' Take:
• Amanda Y. Agan and Michael D. Makowsky unpack the impacts of the minimum wage and Earned Income Tax Credits on recidivism; finding that both policies can reduce criminal recidivism.
• How can funders help states shift their policies to prevent recidivism?
• Learn more about reducing recidivism and unemployment.
For recently released prisoners, the minimum wage and the availability of state Earned Income Tax Credits (EITCs) can influence both their ability to find employment and their potential legal wages relative to illegal sources of income, in turn affecting the probability they return to prison. Using administrative prison release records from nearly six million offenders released between 2000 and 2014, we use a difference-in- differences strategy to identify the effect of over two hundred state and federal minimum wage increases, as well as 21 state EITC programs, on recidivism.
We find that the average minimum wage increase of $0.50 reduces the probability that men and women return to prison within 1 year by 2.8%. This implies that on average the effect of higher wages, drawing at least some released prisoners into the legal labor market, dominates any reduced employment in this population due to the minimum wage.
These reductions in returns to incarcerations are observed for the potentially revenue generating crime categories of property and drug crimes; prison reentry for violent crimes are unchanged, supporting our framing that minimum wages affect crime that serves as a source of income. The availability of state EITCs also reduces recidivism, but only for women.
Recently released prisoners tend to have lower human capital and interrupted work histories; they also carry the stigma of a criminal conviction and the associated risks to potential employers. In the market for low-skilled labor, released prisoners are likely to be at the very margin, their employment sensitive to even moderate changes in wage policies. Their outside option may also include criminal activity, implying recidivism may not just be influenced by whether they can find a job, but whether they can find a job that pays better than crime.