Incarceration, Recidivism, and Employment

Rates of imprisonment have been sharply rising in recent years in many developed countries. While the increase has not been as extreme as in the U.S. or the U.K., in Norway the number of prisoners relative to the overall population has risen by more than 50 percent since 1990. Rising crime rates and increasing prison populations have sparked a growing interest in the subject among social scientists. The usual arguments for sending criminals to prison are incapacitation, punishment, deterrence, and rehabilitation. There are however two long-standing questions related to prisoner reintegration into society. First, what is the rate of criminal recidivism for offenders serving prison time? Second, what are the consequences of incarceration on subsequent labor market outcomes? On the one hand, incarceration could serve a rehabilitation role, discouraging future crime and encouraging work. However, prison time could have the opposite effect if it stigmatizes individuals from potential employers, interrupts human capital accumulation, or exposures inmates to a network of criminals. Whether the net effect of incarceration is positive or negative is ultimately an empirical question, but correlational studies reach conflicting conclusions and are subject to omitted variable bias. To answer these questions we use a particular feature of the Norwegian criminal justice system, where criminal cases are randomly assigned across judges. As certain judges systematically have a higher tendency of giving incarceration sentences compared to other judges, this provide exogenous variation in judge stringency across cases. Using this variation, we provide the first causal evidence on effects of incarceration on criminal recidivism and employment for Norway. Our preliminary findings suggest that being incarcerated decreases future criminal charge, which is opposite to previous U.S. findings. Our results moreover indicate negative but relatively small impacts on future employment. These findings underline the importance of prison quality, especially the extent of education and rehabilitation programs in prisons, and differences in sentence lengths in Norway and in the U.S. prison system as factors driving the relationship between incarceration, recidivism and future employment.