Longitudinal Evidence on the Impact of Incarceration on Labour Market Outcomes and General Well-Being

Steven Stillman, Motu Economic and Public Policy Research
Malathi Velamuri, Victoria University of Wellington

This paper examines the impact of being incarcerated on labour market outcomes and general well-being using longitudinal data from the nationally representative Household Income and Labour Dynamics of Australia (HILDA) survey. We estimate OLS regression on the entire population, regression models that examine changes in outcomes before/after incarceration for individuals that have been incarcerated, and propensity score matching models that examine changes in outcomes before/after incarceration for individuals that have been incarcerated compared to changes in outcomes for individuals with similar observable characteristics over the same time period. The second and third type of models allow us to control for individual unobservable traits that may simultaneously cause certain individuals to commit crimes and put them at higher risk of poor outcomes. By comparing the OLS estimates to those from the other models, we are able to examine the extent to which individuals that are incarcerated in Australia are negatively selected.