The Effect of Private Sector Work Opportunities in Prison on Labor Market Outcomes of the Formerly Incarcerated

This paper examines the effects of a private sector prison work program called the Prison Industry Enhancement Certification Program (PIECP) on unemployment duration, length of formal employment, and earnings of men and women released from various state prisons between 1996 and 2001. The labor market dynamics of formerly incarcerated men and women are also investigated. The program is found to increase reported earnings and formal employment on the extensive margin, with a stronger impact on the formal employment of women. There is little evidence that it increases formal employment along the intensive margin (i.e., duration of formal employment). Contrary to segmented labor market theories, superior employment (i.e., higher paying jobs) do not lead to increased job stability. Roughly 92% of those that obtain formal employment in the sample experience job loss; however, reincarceration rates are too low to explain this fact. An evaluation of labor market dynamics reveals that traditional human capital variables, criminogenic factors, and a few demographic characteristics determine job loss. In addition, black women, single women, and women with more extensive criminal histories face greater barriers on the labor market than their male counterparts