The Intersection Between the Minimum Wage, Recidivism, and the Illegal Labor Market

Using 1998-2019 cross-sectional data from the National Longitudinal Survey of Youth, this paper analyzes the effect of various minimum wage levels on the probability of recidivism. I use probit models with the probability of recidivism as the dependent variable to conduct my econometric analysis. My findings show that individuals in the sample who live in regions with higher average minimum wages face increased probabilities of recidivism. This relationship is correlational and suggests that increased minimum wages may exacerbate statistical or taste-based discrimination against formerly convicted and incarcerated people in the labor market. My research attempts to consider the illegal labor market in the relationship between recidivism and minimum wages; however, determinations on how this directly impacts the probability of recidivism are difficult to make due to challenges associated with measuring the informal sector. Lastly, I interview formerly incarcerated people with first-hand recidivism experiences and incorporate their testimony throughout my paper