The Minimum Wage, EITC, and Criminal Recidivism
53 Pages Posted: 12 Jan 2018 Last revised: 14 Jul 2021
Date Written: June 1, 2020
For released prisoners, the minimum wage and Earned Income Tax Credits (EITCs) can influence their ability to find employment and their potential wages relative to illegal sources of income, affecting the probability they are reincarcerated. Using administrative prison release records we identify the effects of state variation in minimum wages and EITC policies on recidivism. We find that a minimum wage increase of $0.50 reduces the probability an individual returns to prison within 3 years by 2.15%; these reductions come mainly from returns for property and drug crimes. The availability of state EITCs also reduces recidivism, but only for women.
Keywords: criminal recidivism, minimum wage, earned income tax credit
JEL Classification: J22, J23, J38, K14, K40
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