The effect of pretrial detention on labor market outcomes

Abstract

Around a third of prisoners worldwide (2.8 million) are incarcerated before trial. This paper combines Chilean individual administrative data for criminal cases and labor market outcomes to estimate, by differences-in-differences and instrumental variable approach, the effect of pretrial detention on labor outcomes. Because those pretrial detentions are the most difficult to justify, we focus our analysis on individuals who were free after their final verdict, either because they were found non-guilty or because their convictions didn’t involve incarceration. The results show a negative impact of pretrial detention of 10% on the probability of having formal employment and an 11% decrease in wages, during the six months following the verdict. The magnitudes of these effects are reduced over time, but they remain relevant even 24 months after the final verdict. The evidence suggests that the fact that pretrial detention forces individuals out of the labor market is more relevant that any extra costs due to incarceration such as social stigma