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

Longitudinal Evidence on the Impact of Incarceration on Labour Market Outcomes and General Well-Being This paper examines the impact of being incarcerated on labour market outcomes and general wellbeing using longitudinal data from the nationally representative Household Income and Labour Dynamics of Australia survey. We estimate OLS regressions on the entire population, propensity score matching models that examine outcomes for individuals that have been incarcerated compared to outcomes for individuals with similar observable characteristics over the same time period, and fixed effects regression models that examine changes in outcomes for individuals before/after incarceration relative to changes in outcomes over time for non-incarcerated individuals. The second and third type of models allow us to control for characteristics that may simultaneously cause certain individuals to commit crimes and put them at higher risk of poor outcomes. Our results indicate that incarceration has a large negative short-run impact on the likelihood that individuals are employed, but has a positive impact on total income. We also find that being incarcerated has a significant negative impact on mental health and life satisfaction, but leads to an increased satisfaction with family relationships.