Costs, Benefits and Distributional Consequences of Inmate Labor

We estimate that permitting inmate labor would likely increase national output, but by less than 0.2 percent of Gross Domestic Product. The largest social benefits from inmate labor are likely to come about from decreased recidivism, although the effect of inmate labor on subsequent crime and recidivism rates has not been adequately studied. The potential inmate workforce is low skilled. We estimate that permitting inmate labor could reduce wages of high school dropouts in the private workforce by 5 percent. To improve the economic contribution of inmate labor, we propose that private firms be allowed to bid for inmate labor, and that inmate workers be subject to all relevant labor legislation, including the right to collective representation. Alternative strategies for reducing recidivism and integrating offenders into mainstream society upon release, such as education and training, should also be considered, perhaps in conjunction with inmate labor. JEL Classification: J4