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JSPES, Vol. 47, No. 1-2 (Spring-Summer 2022)
pp. 114-137

Evolution of the Relationship Between Incarceration and the Labor Market in the United States, 1945-2016

Kerem Cantekin
Middle East Technical University

Ceyhun Elgin
Columbia University

Adem Y. Elveren
Fitchburg State University

This paper examines the relationship between the incarceration rate and several major labor market variables in the U.S. for 1960-2016. Our analysis shows that a high crime rate precedes high punishment intensity. In turn, high punishment intensity is followed by a reduction in the crime rate. Our analysis also reveals that the 10th percentile wage rate is highly correlated with the incarceration rate whereas unemployment length and rate have inconsistent effects. That is, the incarceration rate rises as unemployment falls yet remains stable when unemployment length and rate rise. Finally, inequality has a surprisingly high correlation with the incarceration rate.