[Journal:] IZA Journal of European Labor Studies [ISSN:] 2193-9012 [Publisher:] Springer [Place:] Heidelberg [Volume:] 4 [Year:] 2015 [Issue:] 21 [Pages:] 1-21
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.
Incarceration Prison effects Unemployment Wage loss Discrimination