Are ex-prisoners worse off? The impact of incarceration on employment and earnings in the Netherlands

The aim of this article is to study the labour market outcomes of ex-prisoners in the Netherlands. Using notions from human capital theory and signalling theory, expectations about the effect of incarceration on employment and earnings are derived. The hypotheses are tested using large-scale administrative datasets, provided by Statistics Netherlands. The data contain information about people released from prison as well as monthly economic and yearly background information. Since it is complex to identify a causal effect of incarceration, we employ a quasi-experimental design: For 24 consecutive months, ex-prisoners‟ employment and earnings are compared to future prisoners‟ labour market outcomes. While ex-prisoners‟ labour market outcomes are low after release from prison and increase in the following period, future prisoners have stable labour market outcomes. Additionally, ex-prisoners‟ employment and earnings exceed the ones of future prisoners approximately seven months after release from prison