Association for Public Policy Analysis & Management

The Bureau of Justice Studies reports that since 1990, an average of almost 0.6 million individuals have been released annually from state and federal prisons (BJS, 2014). Many studies have researched the consequences and implications of offender re-entry programs that focus on increasing employment outcomes for such individuals who are just released from prison. Some of these studies suffer from serious methodological concerns, and suggest low to null impact of employment programs on re-arrests. Other studies in Economics that focus on employment and crime relationship use aggregate data on general populations, mostly ignoring the general equilibrium effects as well as micro-economic trade-offs for individuals. Such trade-offs become especially relevant for people at the margin, that is, individuals with relatively old criminal records who are now active in the labor market. This population is the focus of this study, which analyzes the impact of unemployment on the likelihood of returning to criminal activity for ex-offenders who are motivated and actively seeking employment.

I use administrative data from the New York State Division of Criminal Justice Services, Department of Labor, and Department of Health, tracking unemployment and arrest outcomes for a group of individuals between 2008 and 2014. To identify the unemployment-arrest relationship, I organize my data in a panel and use industry-specific variation in unemployment trends caused by the recession in 2008-2009, along with a fixed-effects design to control for time-constant individual heterogeneity. The two-stage least squares estimates suggest that being unemployed for one additional quarter in a year increases the likelihood of being arrested within that year by 3 to 6 percentage points, with substantial heterogeneity by criminal record, a priori risk, and sex. The results suggest larger estimates than those typically found in the literature, suggesting that targeting employment programs at those "on the margin" could substantially reduce re-arrest rates within such individuals.