Crime , punishment and the measurement of poverty in the United States , 1979 - 1997

The rate of incarceration has increased dramatically in the U.S. since 1980. We explore the implications of this increased incarceration on national poverty measurement using micro data for the period 1979–1997. We make use of an as-yet unexplored data set on prisoner earnings, in conjunction with the Current Population Survey to compute earnings of the whole population. It is found that the traditional measurement of poverty, which omits this increased share of the population that has become institutionalized, understates the true degree of poverty in the nineteen nineties to a significant degree. This underestimation has increased during the time period of study. Furthermore, it is the depth of poverty associated with the higher incarceration rate, rather than the higher rate of incarceration alone that has had the greatest impact upon poverty. These results stand in marked contrast to western European economies and Canada. We are grateful to the Criminal Justice Institute, particularly Fred Rolon, for providing guidance with their data. In addition we thank Susumu Imai, Terra McKinnish, Brian Nolan, Lars Osberg and Buhong Zheng for comments on early drafts, and to seminar participants at the University of Colorado at Denver and the University of Colorado at Boulder where the paper was presented. The authors are professors in Economics at, respectively, Concordia University, Montreal, Quebec, Canada, H3G 1M8, and Dalhousie University, Halifax, Nova Scotia, Canada B3H 3J5. E-mail addresses: [email protected] and [email protected].