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First Quarter 2022, 
Vol. 104, No. 1
Posted 2022-01-14

The Impact of Juvenile Conviction on Human Capital and Labor Market Outcomes

by Limor Golan, Rong Hai, and Hayley Wabiszewski

Abstract

This article documents the long-term relationship among juvenile conviction, occupational choices, employment, wages, and recidivism. Using data from the National Longitudinal Survey of Youth 1997 (NLSY97), we document that youth convicted at or before age 17 have lower a full-time employment rate and lower wage growth rate even after 10 years in the labor market. Merging the NLSY97 with occupational characteristics data from the Occupational Information Network (O*NET), we show that youth with a juvenile conviction are less likely to be employed in occupations that have a high on-the-job training requirement and that these occupations have higher wages and wage growth. Accumulated occupation-specific work experience, general experience, and education are important for explaining the gaps in wage and recidivism between youth with and without a juvenile conviction. Our results highlight the important role of occupational choices as a human capital investment vehicle through which juvenile crimes have a long-term impact on wages and recidivism.


Limor Golan is a professor at Washington University in St. Louis and a research fellow at the Federal Reserve Bank of St. Louis. Rong Hai is an assistant professor at the University of Miami. Hayley Wabiszewski is a PhD candidate at Washington University in St. Louis.



INTRODUCTION

In this article, we document the empirical relationship among juvenile conviction, education, adult labor market occupational choices, employment, wages, and recidivism. Although several studies have shown that juvenile adjudication is associated with lower formal educational attainment and an increased likelihood of dropping out of high school, no existing study examines human capital accumulation through on-the-job (OTJ) training.

Our data are from the National Longitudinal Survey of Youth 1997 (NLSY97) and the Occupa­tional Information Network (O*NET). NLSY97 is a longitudinal survey that follows the lives of a sample of American youth born between 1980-84. It provides detailed information on each individual's convictions and incarcerations over time as well as the age and date of the first time the individual had an interaction with the correctional system. It also collects detailed information on each individual's history of employment, occupations, and wages. Finally, it has information on each individual's education, age, gender, race, and measures of cognitive ability. Also, the O*NET data survey provides detailed information on job requirements for and the characteristics of each occupation. Matching the O*NET job requirement data to the NLSY97 data, we are able to analyze the impact of a juvenile conviction on occupational choices, which have long-term consequences on wages.

Using the NLSY97 and O*NET data, we first document that youth with juvenile adjudications have worse educational outcomes. We then show that juvenile convictions are associated with a lower full-time employment rate, even after controlling for ability, education, and general work experience. We also find that individuals who had a juvenile adjudication are less likely to be employed in occupations with high-OTJ-training requirements. We also show that the wage gap between youth with and without a juvenile conviction can be explained by the differences in accumulated occupation-specific work experience, general work experience, education, and ability. We analyze wage growth over a 10-year period of employment and find that a juvenile conviction still reduces the wage growth rates even after controlling for education and occupation-specific work experience. Finally, we document a juvenile conviction to be a strong predictor of the likelihood of adult incarceration.

We do find race and gender differences both in the effects of a juvenile conviction and in the above outcomes. For women, having a juvenile conviction does not have a statistically significant effect on the overall employment probability, but it reduces the probability of full-time employment. For men, having a juvenile conviction reduces both the overall employment probability and the full-time employment probability. In addition, male Black workers are less likely to be employed in all specifications; this finding is consistent with findings in the literature (see Ritter and Taylor, 2011). Moreover, Black workers are less likely to be employed in occupations with high training requirements, even after controlling for test scores, education, and experience. This finding is consistent with the findings in Golan, James, and Sanders (2019). Among women, however, once we control for test scores, the coefficient on the Black race dummy becomes statistically insignificant. This finding is true for wages as well. These findings are consistent with the differences in labor force participation of and selection into the labor market for Black and White women (see Neal, 2004). For Hispanic men and women, the negative effects on outcomes either lose statistical significance or become positive once we account for the differences in test scores.

While our results are suggestive regarding the effects of a juvenile conviction on education, employment, occupational choices, and recidivism, it highlights the rich dynamic relationship among youth crime and labor market choices and outcomes (including occupational choices). We argue that a juvenile conviction reduces the probability of future employment in occupations with high-OTJ-training requirements and that this is an important channel through which youth crime interacts with labor market outcomes. Specifically, this channel helps to generate a long-term impact of youth crime on labor market outcomes and it also acts as a cost that affects a youth's decision to commit crime ex ante in a forward-looking model with crimes.

Our article relates to three strands of the literature. First, our article contributes to the literature on juvenile crime and human capital investment. These existing studies primarily focus on schooling as the measure of human capital investment and find that (i) juvenile arrest/adjudication reduces schooling and (ii) school enrollment reduces future crimes. Regarding (i), Kirk and Sampson (2013) and Aizer and Doyle (2015) both find that juvenile arrest, adjudication, or incarceration reduces the probability of high school graduation. Kirk and Sampson (2013) further show that juvenile arrest reduces the likelihood of four-year college enrollment conditional on high school graduation. Litwok (2015) supports this result, finding that automatic expungement of juvenile conviction records—unconditionally—increases the probability of college attendance and graduation. Evidence for (ii) in Lochner (2004) shows that high school graduates are less likely than high school dropouts to be incarcerated in their 20s. Similarly, Merlo and Wolpin (2015) find that attending school at age 16 reduces the probability of committing a crime at age 19.

Second, our article relates to the literature on juvenile crime and labor market outcomes (see Western, Kling, and Weiman, 2001, for a survey). Litwok (2015) shows that automatic expungement of juvenile criminal records increases an individual's average income in their late 20s. Imai and Krishna (2004) estimate a dynamic discrete choice model of criminal behavior where forward-­looking youth make decisions about whether to commit a crime. The authors show that policies that reduce future labor market punishment for committing a crime lead youth to commit more crime ex ante. Nagin and Waldfogel (1995) look at the impact of conviction at ages 17 and 18 on labor market outcomes at age 19 of young British offenders and find mixed results. They find that conviction status decreases job stability, via more weeks unemployed, a decrease in job duration, and an increase in the number of jobs ever held, but increases weekly earning. Western and Beckett (1999) analyze youth incarceration between the ages of 15 and 22 and its impact on future employment using the NLSY79, finding a long-lasting decrease in employment that does not decay with time. Using NLSY97 data, Apel and Sweeten (2010) find that youth incarceration has a persistent negative impact on formal employment, driven mostly by an increased probability and duration of labor force non-participation. They find that incarceration reduces annual income and that this income gap widens over time.

Third, our article also relates to the literature that investigates the relationship between juvenile crime and future recidivism. This literature is vast, especially in criminology. Nagin and Paternoster (1991), Nagin and Land (1993), and Nagin, Farrington, and Moffitt (1995) evaluate the change in criminal behavior over the life cycle and find that participating in crime early in the life cycle increases the likelihood of participating in crime in the future as social and professional relationships deteriorate. Paternoster, Brame, and Farrington (2001) find some evidence that variation in the propensity to commit crimes as an adult can be attributed to differences in individual criminal behavior established during adolescence as opposed to processes that occur during adulthood. Several studies in economics also evaluate this relationship. Levitt (1998) shows deterrence is empirically more important than incapacitation in reducing crime, particularly in the case of property crimes. Aizer and Doyle (2015) find that individuals on the margin of juvenile incarceration who are incarcerated are significantly more likely to recidivate as adults, especially for serious crimes, relative to those who are not incarcerated. Indeed, Bayer, Hjalmarsson, and Pozen (2009) explore the peer effects of juvenile incarceration on juvenile recidivism and find that there are significant peer effects that increase the probability of recidivism for crimes in which an individual already has experience.


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