Examining the Impact of Minimum Wage and EITC on Criminal Recidivism

By Sharma, Damini | Chicago Policy Review (Online), December 11, 2018 | Go to article overview

Examining the Impact of Minimum Wage and EITC on Criminal Recidivism


Sharma, Damini, Chicago Policy Review (Online)


Recidivism, a person’s relapse into criminal behavior, is a fundamental challenge in criminal justice. While the issue is widely discussed, few solutions have been shown to keep previous offenders from returning to criminal behavior. Part of the issue is the sheer scope of the problem: A 2005 study tracked approximately 400,000 prisoners in 30 states and found that two-thirds of them were rearrested within three years of release. Of those rearrested, property offenders were more likely to be arrested than violent offenders. Additionally, released prisoners who are younger and less educated are more likely to be rearrested, potentially due to added difficulties in finding stable, well-paying jobs upon release.

A new study by Amanda Agan and Michael Makowsky looked at this possibility in the context of general labor market policies. The authors studied the impact of minimum wage and the availability of state Earned Income Tax Credits (EITCs) on recidivism. They analyzed nearly six million individual prisoner release records from 2000 to 2014 across 42 states, using data acquired from the Bureau of Justice Statistics’ National Corrections Reporting Program. Because both minimum wage and EITCs vary by state and time, the researchers exploited this variation and used a difference-in-differences methodology to understand how those policies impact recidivism. This methodology calculates the impact of a treatment or policy by comparing the average change over time for a treated group to the average change over time for a control group. In this paper, the authors calculated the chance of recidivism for ex-prisoners living in different states and time periods with different minimum wage and EITC laws to compare the outcomes over time for the various groups.

The authors found that a 50-cent increase in minimum wage corresponds to a 2.8 percent decrease in the probability that an individual returns to prison within one year. These results were particularly noteworthy because the expected impact of a higher minimum wage on the labor market is ambiguous. Critics of a higher minimum wage claim that this increase is associated with a reduction in demand for workers. …

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