Beyond Human and Social Capital Punishment: The Stigma of Incarceration, Race, and Their Effect on Earnings through the Life Course

Abstract

Incarceration is a stigmatizing event that is likely to lead to negative labor market outcomes. Prior research has linked incarceration to reduced earnings and slow wage growth, but little is known about individual differences that lead to divergent wage trajectories between formerly and never-incarcerated individuals. Moreover, race differences in these wage trajectories have yet to be fully explored. I employ a multilevel modeling technique (MLM) to examine hourly wage trajectories across the careers of incarcerated and non-incarcerated males using the National Longitudinal Survey of Youth (NLSY). I find that incarceration leads to a significant reduction in wages that is not explained by individual differences in human or social capital. This suggests that incarceration is a stigmatizing event with long-term labor market consequences. I do not find any evidence for a significant interaction between race and previous incarceration; however, additively, I find that formerly incarcerated white individuals earn as much as never-incarcerated African Americans through their late 40s.