Prisoners Labour Market History and Aspirations: A Focus on Western Australia *

Transcription

1 Prsoners Labour Market Hstory and Aspratons: A Focus on Western Australa * by Margaret Gles School of Economcs and Commerce The Unversty of Western Australa and Anh T. Le School of Economcs and Commerce The Unversty of Western Australa Abstract Ths paper examnes the employablty and labour market aspratons of prsoners. The results suggest that repeat prsoners are less lkely to be employed than nonrepeat prsoners. However, a large proporton of the employment dfferental between repeat and non-repeat prsoners s due to dfferences n coeffcents. There s no evdence to suggest that the frequency of ncarceraton affects ndvdual characterstcs whch may lmt prsoners labour market aspratons after ther release from prson. Correspondence: Tram Le, School of Economcs and Commerce, Mal Bag M251 (Economcs), The Unversty of Western Australa, 35 Strlng Hghway, Crawley, WA 6009, Australa. Emal: ale@bz.uwa.edu.au

2 I. Introducton The labour market outcomes of ex-prsoners are mportant for a number of reasons. From an economc perspectve, the lack of labour market success mples that ex-prsoners wll be more relant on socal welfare such as beneft payments and health, housng, communty care and labour market programs, all of whch ncrease the fnancal burden on socety. For example, the estmated drect cost of assstance to the unemployed for was $5 181 mllon (Commonwealth of Australa 2005). In addton, unemployment represents a loss of output. That s, the economc growth rate and tax revenues can be enhanced f ex-prsoners are actve labour market partcpants. From a socal perspectve, lack of labour market success may cause exprsoners to re-offend or engage n unhealthy behavour such as usng llegal drugs, consumng excessve alcohol or commttng acts of volence. The annual cost of ncarceraton n was $ per prsoner (WA Department of Justce 2005). Hence, a reducton n the number of offenders, re-offenders and ncarceratons can lead to substantal cost savngs for the government. The objectve of ths paper s to examne the employablty of prsoners before they were ncarcerated and ther labour market aspratons after leavng prson. In partcular, we are nterested n whether repeat prsoners are dsadvantaged n the labour market. The contrbutons of the paper can be dentfed as follows. Frst, the data set used n the paper s unque n that t s the frst data set on prsoners n Western Australa whch contans comprehensve nformaton on ther educaton and work hstory. Ths type of nformaton s useful n predctng the labour market success of prsoners. Second, t s useful to determne f characterstcs specfc to prsoners affect ther employablty and the extent to whch repeat prsoners are dsadvantaged n employment relatve to frst tme prsoners only. Thrd, there s 1

3 lmted research on the labour market outcomes of ex-prsoners after ther release. Moreover, the exstng lterature focuses on qualtatve or bvarate analyses of the economc and socal outcomes of ex-prsoners. Ths paper attempts to predct the choces that prsoners may make after leavng prson usng a multvarate approach. Fnally, ths paper offers some nformaton on the lkelhood of ex-prsoners beng actve labour market partcpants after ther release. Ths paper s organsed nto sx sectons. Secton II provdes a lterature revew. A dscusson of the data s presented n Secton III. Secton IV outlnes the models to be estmated. The results are dscussed n Secton V. A concluson s provded n Secton VI. II. Lterature Most lterature suggests that crme ncdence and recdvsm are nversely related to the educatonal attanment and employment of the ndvdual (Batchelder and Pppert 2002; Klng and Krueger 2001). That s, offenders are more lkely to be less educated and/or to have less stable employment hstores than non-offenders. Correctons Vctora estmates that about two-thrds of repeat offenders are unemployed at the tme they re-offend (Vctoran Department of Justce cted n Graffam et al. 2004). Whlst the correlaton between crmnalty and labour market success s under no doubt, the drecton of causaton has been the subject of much debate. For example, many macroeconomc studes of the lnk between crmnalty and labour markets suggest that mprsonment s a functonal response to labour surplus (Chrcos and DeLone 1992; Rusche and Krchhemer 1968). That s, unemployment and 2

4 concomtant poor economc crcumstances, and lack of meanngful and productve actvty, lead to crmnal behavour. More recent studes, however, suggest that the drecton of causaton s contrare d'au; that t s crmnalty, ncludng mprsonment that contrbutes to hgh unemployment rates, low wages and low labour force partcpaton rates, partcularly of males (see, for example, Sutton 2002 for a summary of these nfluences). Two promnent reasons for ths are the eroson of human captal durng ncarceraton and the stgma of a crmnal record affectng employment prospects. An alternatve explanaton for the exstence of a correlaton between crmnalty and unemployment s that crme and unemployment are fuelled by factors commonly dentfed n both lteratures. For example, lack of stablty n people s prvate lves can affect employment stablty and re-entry nto employment. Many exprsoners fnd that support from famly and frends s wthdrawn durng ther perod of ncarceraton and that they commence parole wth no fxed abode and fractured or depleted socal captal (through loss of networks). These nfluences mpact on employment opportuntes as a large proporton of jobs are found through socal networks. For example, around one n fve jobs n 1996 were obtaned through nformaton from frends and relatves (Australan Bureau of Statstcs 2001). Prsoner networks and correctonal authorty job placement servces help, to some extent, to replace these mssng socal networks, but t s not clear how successful these alternatves mght be. Perods of ncarceraton and homelessness send sgnals to employers on mportant soft sklls, such as trustworthness and relablty, and ths can dmnsh employment prospects for ex-prsoners. In ther 2001 survey of employers preferences regardng job applcants wth crmnal hstores, Holzer et al. (2002) 3

5 found that employer s wllngness to hre ex-prsoners s qute lmted. Ths s exacerbated by low labour market demand n areas wth smlar demographcs to the ex-prsoner populaton. In the absence of background checks, employers tend to resort to excludng applcants wth profles smlar to, nter ala, ex-prsoner groups. In the US, young black males are partcularly prone to ths form of dscrmnaton. Homelessness s a partcular ssue for job applcants, whether they are exprsoners or not. Not only mght t sgnal 'soft sklls' but t also makes t dffcult for prospectve employers to contact applcants for further processng and/or notfcaton. Lttle Hoover Commsson (1998) (cted n Petersla 2000, p.5) found that, on average, ten percent of parolees n Calforna were homeless, but that n the major ctes of San Francsco and Los Angeles ths fgure was as hgh as 30 to 50 percent. Moreover, returnng to the labour market wth a gap n ther employment record also sgnals a decay of human captal (for a revew of barrers to employment, see Sngley 2004). Ths s compounded by ex-prsoners beng less sklled and less attuned to the socal cues that mght arse wthn ntervews (Bosher and Johnson 1974). Prsoners and ex-prsoners are partcularly prone to poor health, both physcal and mental (Dutrex 2000 and Hrsch et al cted n Graffam et al. 2004) and low self-esteem and/or motvaton (Fletcher 2001 cted n Graffam et al and Helfgott 1997) and these are postvely correlated wth low partcpaton rates, employment levels and wages. For example, many prsoners suffer depresson and are on medcaton. Ths llness can take place when they are frst sentenced and realse the mmedate mpacts of ncarceraton on ther lves. It can also emerge durng long sentences as marrages fal, chldren and other famly members stop vstng, and famly crses, such as llness or death, occur. As a result of 4

6 densttutonalsaton (ths apples to Australa as well as many overseas countres), the rate of ncarceraton of the mentally ll has rsen substantally. Whlst the proporton of prsoners wth mental llness s not known for Australa, the rate for the US s about twenty per cent (Moore 1996). Other psychologcal problems are exacerbated by prson procedures ncludng soltary confnement. Overcrowdng n prsons also contrbutes to mental and physcal ll-health. All WA prsons have reported bed capacty lmts whch are regularly exceeded (generally, sngle cell accommodaton beng converted to double, and, n some nstances, old accommodaton blocks beng re-commssoned). Prsoners have been found to be less physcally healthy, sometmes due to ther pre-prson lfestyles. Moore (1996, p.4) states that pror to ncarceraton, prsoners often lve as transents or n crowded condtons, tend to be economcally dsadvantaged, and have hgh rates of substance abuse, ncludng ntravenous drug use. In prson, prsoners have access to health and dental care, but ths does not mean that they have generally good health. Colds and nfluenza vruses spread quckly through prson populatons due to the nature of prson housng and communal actvtes. Agan, overcrowdng tends to exacerbate ths. Prsoners are also prone to communcable dseases such as tuberculoss, hepatts and HIV (Curts et al cted n Moore 1996). In addton to labour market repercussons, group dynamcs (ncludng the exstence of gangs (Moore 1996; Petersla 2000) and knowledge transfers n prsons can flow over nto the outsde world promotng ant-socal behavours such as ncvlty and dsorder (Moore 1996), transence and loterng (Petersla 2000) and recdvsm. Petersla (2000) states that, n the US, most re-arrests occur wthn sx 5

7 months of release wth two thrds of all parolees beng rearrested wthn three years. Thus, magnfcaton of unfavourable labour market effects occurs. The Job Seeker Classfcaton Instrument (JSCI) (Department of Employment Educaton Tranng and Youth Affars 1998) has been used by government agences such as Centrelnk to measure a job seeker s relatve labour market dsadvantage. The JSCI can dentfy job seekers who are lkely to be long-term unemployed. Hghly dsadvantaged job seekers are typcally charactersed as beng more lkely to: have lmted Englsh language sklls; be an ndgenous job seeker; be homeless or lve n short-term emergency accommodaton; have a low level of educatonal attanment; have personal factors or matters affectng ther ablty to gan employment; or be an ex-prsoner. Ths type of nformaton s collected by Centrelnk. Ponts are assgned to each of the 14 queston responses on a number of characterstcs such as age, educatonal attanment, brthplace and Englsh profcency. The score s derved by addng the ponts for each job seeker s queston responses. The hgher the JSCI score the hgher the probablty of a job seeker becomng long-term unemployed. For example, an ndgenous job seeker s allocated 11 ponts whle an Australan-born non-ndgenous job seeker s allocated zero ponts. Wth regard to educatonal attanment, a job seeker who has completed less than 10 years of school or attended a specal school s gven sx ponts. A job seeker who has a custodal perod of one month or longer s gven eght ponts compared to three ponts for those who have a custodal perod of one month or less. It can be seen that ex-prsoners who served more than one month are deemed to be more dsadvantaged n the labour market than those wth a low level of educaton. 6

8 III. Data The data set used n ths study s from the 2003 survey of fve adult metropoltan publc prsons n Western Australa. The survey ncludes two female prsons and three male prsons. The mnmum-securty prson for women located n the nner metropoltan area has a capacty of nmates. The response rate for the survey at ths prson was about 50 percent of the sentenced prsoners. A second women s prson houses maxmum-, medum- and mnmum-securty prsoners. It s located n the outer metropoltan area and can take between nmates. The response rate here s 50 percent of sentenced prsoners. The maxmum-securty male prson houses prsoners and s located n the outer metropoltan area. The response rate here s only 13 percent of sentenced prsoners. One mnmum-securty men s prson houses prsoners and s located outsde the metropoltan area south of Perth. The response rate at ths prson s 87 percent of sentenced prsoners. A second male mnmum-securty prson s located outsde of the metropoltan area east of Perth and can house prsoners. The response rate at ths prson s 90 percent of sentenced prsoners. The data are collected by personal ntervews wth the prsoners. In order to assess the accuracy and relablty of the responses n the ntervews, ntervewers are asked to assess the respondent on three areas, namely lteracy, competency and honesty. These represent the ntervewer s percepton of the respondent and do not follow rgorous defntons. For example, the percepton of the respondent s lteracy s not defned n terms of benchmarks for readng and wrtng. It refers to the respondent s apparent ablty to comprehend the voced questons, use the showcards or gve approprate responses. Almost all ntervewed prsoners are deemed 7

9 competent and relable n ther responses and 94 percent are consdered suffcently lterate or competent for the purposes of the survey. The data set contans nformaton from completed surveys by 453 prsoners, 21 percent females and 79 percent males. The survey contans personal nformaton (e.g., age, sex), employment hstory (e.g., type of job, hours worked, earnngs), past educaton and tranng (e.g., hghest level of schoolng), prson nformaton (e.g., current sentence length and offence), and current prson educaton, tranng and work. It should be noted that the sample of prsoners n ths survey dffers from the profle of all adult prsoners n Western Australa n a number of ways. Frst, there s an over-representaton of female prsoners n the sample by 13 percentage ponts (21 percent of ntervewed prsoners are females compared to eght percent of the adult prson populaton). Second, there s an under-representaton of ndgenous prsoners (21 percent n the survey compared wth 35 percent n the general prson populaton). Thrd, there s a hgher percentage of surveyed prsoners who have completed year 11 or hgher (31 percent) compared to the metropoltan prson populaton (17 percent). Fnally, the response rate for the male maxmum securty prson s low, beng only 13 percent. 1 Ths paper focuses on prsoners aged years. 2 Table 1 presents descrptve statstcs of the characterstcs of all prsoners wthn ths age group. 3 It can be seen that prsoners have a number of unque characterstcs. Frst, only a small percentage of prsoners (18 percent) are employed n hgh sklled jobs pror to ther current ncarceraton. Second, less than half of the prsoners who are labour market partcpants (44 percent) are employed n a pad job four weeks pror to ther current ncarceraton. Ths s consderably lower than that for the general populaton where the employment rate for those n the labour force s around 93 percent. Thrd, whle 8

10 nearly half of prsoners do not have a prevous ncarceraton, 38 percent have had more than one pror ncarceraton. Fourth, the majorty of prsoners (45 percent) have commtted major crmes (e.g., robbery wth volence, sex offences, homcde). Ffth, about one quarter of prsoners are undertakng some form of tranng durng ther current ncarceraton. Fnally, over half of the prsoners ntend to ether return to the job they had pror to ther current ncarceraton or change career path (e.g., look for better pad jobs, look for dfferent jobs). Ths suggests that the majorty of prsoners ntend to actvely partcpate n the labour market after ther release. However, 45 percent of prsoners do not plan to actvely partcpate n the labour market after ther release. Ths can have mportant mplcatons at the ndvdual level wth regards to economc hardshp, low morale and possblty of re-offendng, and at a socetal level wth regard to welfare consumpton. The average optmsm score (Scheer and Carver 1987) among prsoners s 20 ponts and 48 percent of prsoners have an optmsm score above ths average score. The optmsm ndex ranges from four to From studes of the non-prson populaton (e.g., Dolber et al. 2001; Hjelle et al. 1996; Long and Schutz 1995; Montgomery et al. 2003; Scheer and Carver 1987 and Scott and Meln 1998), the average optmsm ndex ranges between and Therefore, compared to the non-prson populaton, the optmsm ndex from the WA prson sample seems to be at the lower end of the range. 9

11 Table 1 Means and Standard Devatons of Varables Varable Mean Standard Devaton Male (%) Age (yrs) Non-ndgenous Australan-born (%) Indgenous (%) Overseas born (%) Educaton (yrs) Marred (%) Chldren (%) Resde n metropoltan (%) Hgh sklled job pror to prson (%) No pror ncarceraton (%) One pror ncarceraton (%) More than one pror ncarceraton (%) Optmsm ndex Above average optmsm (%) Drugs offence (%) Major offence (%) Mnor offence (%) Tranng n prson (%) Employment (%) Return to last pad job pror to prson (%) Change career path (%) No employment prospects after prson (%) Sample 433 IV. Methodology Two models are estmated n ths paper, namely employment and labour market aspratons. The employment model used n ths study s based on a standard model from prevous research on employment/unemployment (see, for example, Le and Mller 1999 and Ross 1993). The model of employment can be expressed as: Ε = β + ε. (1) * X Where * E s a latent varable that captures the propensty towards employment of prsoner, X s a column vector of observed factors (e.g., brthplace, age, educatonal attanment, number of tmes been n prson 5 ), β s a row vector of coeffcents and ε s a random error term. Snce we do not observe the propensty towards employment, two outcomes are derved from * E wth reference to an arbtrary threshold of zero. 10

12 Thus, the prsoner s held to be employed ( E = 1) where * E exceeds zero, and s unemployed ( E = 0 ) otherwse. The dependent varable n ths analyss s the observed bnary ndcator of the respondents labour force status pror to ncarceraton that corresponds to E n ths model. The model constrans the predcted values from the estmaton to be n the unt nterval (.e., 0 to 1). The estmates of β are obtaned usng a logt procedure. 6 Wth the logt model, the natural logarthm of the odds rato of the probablty of employment (E) to the probablty of unemployment ( 1 E ), log = [ E /(1 E)] s expressed as a lnear combnaton of the explanatory varables, namely log[ E /(1 E)] = βx. The parameter estmates n the logt model therefore record the mpact on the logarthm of the odds rato of a small change n the explanatory varables. Employment s measured as those who were employed n the four weeks pror to ther current ncarceraton. However, unlke the Australan Bureau of Statstcs Monthly Labour Force survey whch denotes a set of partcular dates, ths four-week perod s dfferent for each prsoner. Therefore, the employment measure wll be affected by busness cycle actvty n those four weeks. Prsoners startng ther sentence n 1990, for example, wll have experenced a weak labour market so ther employment rate s lkely to be low. Prsoners startng ther sentence post 2000 wll have experenced a stronger labour market wth hgh employment rates. In order to take nto account the busness cycle effects on employment, the average annual unemployment rates for the startng year of each prsoner s current ncarceraton are ncorporated nto the model. Furthermore, dfferent unemployment rates for metropoltan and non-metropoltan areas n Western Australa are used to capture dfferent areas of resdence of prsoners pror to ther current ncarceraton. 7 11

13 The second model to be estmated focuses on the labour market aspratons of prsoners after ther ncarceraton. After ther release prsoners have three dscrete choces: return to the last pad job held pror to ther ncarceraton ( j = 1) ; change career path (e.g., pursue further study, do somethng else, fnd better pad jobs) ( j = 2) and ether do not return to ther old job (due to crmnal record or other reasons) or do not ntend to actvely partcpate n the labour market ( j = 3). These three categores form mutually exclusve groups. They can be analysed usng a multnomal logt model. Wth the multnomal logt model, the probablty that prsoner wth characterstcs X wll choose labour market opton j (j=1, 2, 3) s expressed as: P j X = 3 e k = 1 δ X j e δ X k. (2) Where the δ j s are (1 x m) vectors of coeffcents to be estmated and X s a (m x 1) vector of exogenous varables lkely to nfluence the category of labour market choce of prsoner. Snce each prsoner must choose one of the three labour market optons, only two of these sets of coeffcents can be unquely defned. We normalse by settng the last opton to zero (that s, δ 3 = 0 ). Included n the set of explanatory varables would be personal characterstcs, type of job pror to ncarceraton, type of offence commtted for the current prson term, optmsm ndex, tranng n prson and predcted real hourly wage. It should be noted that equaton (2) models what prsoners would lke to do after ther release from prsons. The actual labour market actvty after beng released from prson s not observed. Ths makes the analyss dfferent from prevous studes (e.g., Steurer et al. 2001) whch examne actual labour market actvtes of ex- 12

14 prsoners. In addton, we consder ndvduals who had a pad job at any pont n tme n the fve years pror to ther current prson sentence. Some ndvduals may have had a job fve years earler for a bref perod and had snce left the job. Gven the possble tme lag between the last job and the current prson sentence, these ndvduals are more lkely to ether change career or ext the labour market. Ideally, only prsoners who had a job n the four weeks pror to ther current ncarceraton should be consdered. However, due to small sample sze a longer tme perod of employment s chosen. Consderatons are made wth regard to the endogenety of the ndvdual s wage varable and the absence of nformaton on the market wage rate for prsoners who dd not work pror to ther current ncarceraton. To account for ths problem, a wage equaton s estmated and the predcted wage s ncluded n the multnomal logt model. The wage equaton s expressed as: ln W = γ + ε. (3) A Where W s the real hourly market wage rate from the last pad job held pror to current ncarceraton of prsoner, A s a column vector contanng personal and human captal characterstcs (e.g., brthplace, gender, age, educatonal attanment, martal status and area of resdence), γ s a row vector of coeffcents and ε s a stochastc dsturbance term. Snce the wage rate s observed only for prsoners who worked pror to ther current prson sentence, correcton s made for sample selecton bas usng the followng steps. Frst, the probablty of workng s estmated usng a logt procedure. In ths case a reduced form labour supply functon (equaton 1) s estmated. The coeffcents from equaton (1) are used to construct the nverse Mlls rato (see Heckman 1979). 13

15 Second, the nverse Mlls rato s ncluded n the wage equaton (3) as an addtonal varable to correct for sample selecton bas arsng from estmatng the equaton usng only workng prsoners. The ncluson of the predcted real hourly wage varable n the labour market choce model s to capture the opportunty costs of not partcpatng n the labour market for those who had a pad job pror to ther current ncarceraton. V. Results The dscusson wll frst focus on the employablty of prsoners pror to ther current ncarceraton (estmaton of equaton 1). Table 2 presents the margnal effects of the probablty of beng employed. 8 Column () presents the base model. Column () ncludes a number of nteracton terms between the number of mprsonments and age, gender and ndgenous status. The McFadden R 2 s 0.11 and around 65 percent of cases are correctly predcted. A more useful way of vewng the predcton success s as an mprovement upon a random assgnment. A random assgnment of ndvduals to the employment and unemployment outcomes usng the sample ratos (for 416 prsoners) for these labour market states of : would have a predcton success of 51 percent. The mprovement upon a random assgnment s 14 percentage ponts, or 29 percent of the gap between the predcton success under random assgnment and perfect predcton. The results wth regard to personal characterstcs are consstent wth a pror expectatons. For example, lookng at column () results, compared to the nonndgenous Australan-born prsoners, ndgenous prsoners are 16 percentage ponts less lkely to be employed. The results show that males are more lkely to be 14

16 employed pror to ther current ncarceraton than females by 31 percentage ponts. Age s entered nto the employment model as a quadratc functon. The mpact of age on the probablty of beng employed s non-lnear and sgnfcant. That s, employment ntally ncreases wth age but decreases for older prsoners and the turnng pont s around 42 years. However, the margnal effect of age on the probablty of beng employed s very small. Evaluated at 20 years of age, for each extra year of age, ceters parbus, the probablty of beng employed s 1.83 percentage ponts. 9 At 30 years t ncreases by 0.96 of a percentage pont for each extra year of age and at 41.5 years the probablty of beng employed decreases margnally by 0.03 of a percentage pont per extra year of age. Lower employment among older prsoners may reflect deprecaton/obsolescence of human captal sklls for ths group. There s a postve relatonshp between educatonal attanment and employment. However, the margnal effect s relatvely small, beng 1.3 percentage ponts. Famly nfluences have a postve effect on the employablty of prsoners. For example, compared to those who are not marred, marred prsoners are nne percentage ponts more lkely to work pror to ther current ncarceraton. In addton, prsoners who have chldren are 12 percentage ponts more lkely to be employed than those who do not have chldren. These famly varables may capture both demandsde and supply-sde nfluences. From the supply-sde perspectve the greater famly responsbltes of ether marred prsoners or those who have chldren are expected to ncrease ther ncentve to work. From a demand-sde perspectve, employers may be more lkely to employ famly-orented persons because they are held to have greater work commtment, be more relable and potentally more productve (Le and Mller 1999). 15

17 Table 2 Margnal Effects of the Probablty of Prevous Employment Pror to Incarceraton Varable Coeff. () t-rato Coeff. () t-rato Constant Indgenous Overseas born Male Age Age 2 / Educaton Marred Chldren Resde n metropoltan area Above average optmsm No pror ncarceraton One pror ncarceraton Unemployment rate No pror ncarceraton x age n.a. n.a No pror ncarceraton x age 2 n.a. n.a No pror ncarceraton x male n.a. n.a No pror ncarceraton x ndgenous n.a. n.a One pror ncarceraton x age n.a. n.a One pror ncarceraton x age 2 n.a. n.a One pror ncarceraton x male n.a. n.a One pror ncarceraton x ndgenous n.a. n.a χ 2 (13) χ 2 (21) McFadden R Predcton success Sample Note: n.a. = not applcable. Margnal effects for contnuous varables are calculated as E / X = β ( E )(1 E ) and as dfferences n predctons for bnary varables. E = As dscussed n Secton II, ex-prsoners are more lkely to face long-term unemployment than someone wth poor sklls (e.g., low level of educaton). The negatve relatonshp between pror ncarceratons and employment may be due to a number of reasons. Frst, there may be a stgma attached to crmnalty. Hence, employers are reluctant to employ those who have pror crmnal records. Second, the frequency of pror prson sentences may make t dffcult for prsoners to mantan employment. The data show that 53 percent of offenders have been n prson at least 16

18 once pror to ther current ncarceraton. The results from Table 2 show that an ncrease n the number of prson terms served reduces employment outcome for prsoners. For example, compared to those who had been n prson more than once before, those who had no pror ncarceraton are 18 percentage ponts more lkely to be employed. However, there s no sgnfcant dfference n the employment probablty of prsoners who had been n prson once and those who had been n prson twce or more. Ths s consstent wth prevous studes (e.g., Sutton 2002) whch fnd pror prson sentence has a negatve mpact on the employablty of prsoners. Moreover, the results suggest the dfference n employablty of prsoners s not so much the number of tmes they had been ncarcerated but rather havng pror mprsonments. 10 The mean employment for those wth no pror ncarceraton s 52 percent compared to only 39 percent for those who have pror mprsonment. It s nterestng to note that the margnal effect of prevous ncarceratons s 17 tmes that of educatonal attanment. Ths s consstent wth a hgher JSCI score allocated to exprsoners than to ndvduals who have completed less than 11 years of school. Eght nteracton terms are ncluded n the model of employment. These terms are ncluded to take nto account the mpact frequency of ncarceratons has on certan ndvdual characterstcs whch may affect prsoners employablty pror to ther current mprsonment. The frst set of nteracton terms captures how frequency of mprsonments affects the employablty of prsoners as they age. The second set of nteracton terms captures how frequency of mprsonments affects the probablty of employment across gender. The fnal set of nteracton terms measures how frequency of mprsonments affects the relatve employment outcomes of ndgenous prsoners and non-ndgenous prsoners. 17

19 The results from column () show that on the whole the frequency of pror ncarceraton does not affect ndvdual s characterstcs whch may have negatve effects on ther employablty. In addton, wth the excepton of the educaton varable, ncluson of the nteracton terms does not sgnfcantly change the other coeffcents n the model. The educaton varable s nsgnfcant n the employment model contanng the nteracton terms. Only one out of eght nteracton terms s statstcally sgnfcant. Ths result shows that ndgenous prsoners wth no pror ncarceratons are 27 percentage ponts less lkely to be employed compared to nonndgenous prsoners wth no pror ncarceraton. A number of mplcatons can be derved from the results. Frst, gven that ndgenous prsoners have consderably lower levels of educatonal attanment (an average of eght years of schoolng) than non ndgenous prsoners (an average of ten years of schoolng), any attempts to ncrease ther human captal sklls whle n prson wll have a strong mpact on ther employablty, ceters parbus. Second, for some ndgenous prsoners, tme n prson may offer them an opportunty to enhance ther sklls whch may not have been possble on the outsde. 11 Fnally, prsoners who undertook a tranng course n prson have access to formal job placement networks upon ther release. Ths mproves ther job search and ncreases ther employment opportuntes. As noted earler, employment of prsoners wth pror ncarceraton s consderably lower than that for those wth no pror ncarceraton. To assess whether the low level of employment among repeat prsoners s due to ther characterstcs or due to other factors such as employers atttudes towards hrng people who have served a prson sentence, the predcted employment rate for repeat prsoners s computed usng the coeffcents from the employment model for non-repeat prsoners. That s 18

20 ˆ RP NP RP ( E ) = X (4) βˆ where RP Ê s the predcted employment for prsoners wth pror ncarceraton and NP βˆ s the set of coeffcents estmated for prsoners who have not been n prson pror to ther current ncarceraton. 12 Equaton (4) can be nterpreted as employment for repeat prsoners f they were treated n the same way as non-repeat prsoners. Hence, f E ˆ > E (the actual employment of repeat prsoners) then the low actual RP RP employment among repeat prsoners may be due to employers preference for nonrepeat prsoners or other factors, rather than due to the personal characterstcs controlled for n the model. The predcted employment for repeat prsoners (equaton 4) s 48 percent whch s only margnally lower than the average employment for non-repeat prsoners (52 percent). However, the predcted employment of repeat prsoners s consderably hgher than ther average employment (39 percent). When predcted employment for non-repeat prsoners s computed usng the coeffcents of repeat prsoners, those wth no pror ncarceraton have predcted employment of only 36 percent. 13 Ths suggests that the dfference may be due to the treatment of repeat and non-repeat prsoners n the labour market or other factors not controlled for n the model. In order to further examne the contrbuton of explaned and unexplaned components of the dfference n employment probablty, the decomposton of the employment models for repeat and non-repeat prsoners s undertaken. The decomposton method for the logt model analogous to Blnder s (1973) approach for models estmated usng ordnary least squares procedures has been proposed by Farber (1990). Under Farber s (1990) procedure, the dfference n the average predcted probablty of employment s decomposed nto two components, 19

21 namely one that s attrbutable to dfferences n the characterstcs of repeat and nonrepeat prsoners and a part that s lnked to dfferences n estmated coeffcents. Usng Farber s (1990) decomposton, the average predcted probablty for group s defned as: n F( β X j ) j= P( β X ) = 1. (5) n Where P( ) s the average predcted probablty of employment and F( ) s the cumulatve dstrbuton functon for the logt model. The dfference n the average predcted probablty between repeat and non-repeat prsoners can be categorsed nto two parts as follows: P( X NP β NP ) P( X RP β RP ) = [ P( X NP β RP ) P( X RP β RP )] + [ P( X NP β NP ) P( X NP RP β )] (6) The frst term on the rght-hand sde of equaton (6) s part of the dfference n employablty that s due to dfferences n the values of the measured attrbutes used n the model to account for the probablty of beng employed. It shows the dfference n the probablty of beng employed that would arse n a stuaton where both groups characterstcs were lnked to employment n the same way. The second term on the rght-hand sde s the unexplaned component of the dfference n employment. Ths s the part of the dfference n employment that s generally nterpreted as an effect due to dfferent treatments of the two groups. There are a number of ways the decomposton can be mplemented, dependng on the choce of repeat prsoners and non-repeat prsoners as the benchmark group. 14 From the decomposton of the change n employment between repeat prsoners and non-repeat prsoners, the dfference n employment probablty between repeat and non-repeat prsoners s 13 percentage ponts. Ths postve value ndcates 20

22 that non-repeat prsoners have an advantage n the labour market over repeat prsoners. However, a greater proporton of ths advantage s due to unexplaned factors. The explaned component s negatve, thus ndcatng that changes n characterstcs have ncreased the employment rate of repeat prsoners relatve to those of non-repeat prsoners. The component of change n employment that s due to changes n coeffcents s postve. Ths shows that changes n coeffcents have ncreased non-repeat prsoners employment probablty relatve to those of repeat prsoners. The unexplaned porton of the decomposton may capture the mpact of model ms-specfcaton, omtted varables and measurement errors, as well as changes n coeffcents that mght be lnked to the labour market or employers hrng preference for non-repeat prsoners over repeat prsoners. For these reasons, attrbutng the unexplaned component to a specfc causal factor s problematc. Gven that ex-prsoners are less lkely to do well n the labour market than non-prsoners, t s useful to examne the labour market aspratons of ex-prsoners. Table 3 presents the results for the multnomal logt model of labour market actvtes (equaton 2). 15 The coeffcents n column () gve the margnal effects of returnng to the last pad job held pror to ncarceraton. The coeffcents n column () gve the margnal effects of changng career path. The coeffcents n column () gve the margnal effects of ether not returnng to the last pad job due to havng a crmnal record (or other reasons) or extng the labour market

23 Table 3 Margnal Effects of the Probablty of Labour Market Aspratons Base Model Return to Last Job () Change Career () Ext Labour Market () Varable Coeffcent Coeffcent Coeffcent Constant (-1.54) (1.45) (0.09) Indgenous (0.33) (0.59) (-0.88) Overseas born (-0.17) (0.86) (-0.69) Male (2.84) (-1.57) (-1.28) Age (-0.48) (-2.64) (3.67) Hgh sklled job pror to prson (1.24) (-1.08) (-0.14) Marred (0.49) (-0.96) (0.49) Chldren (0.11) (0.28) (-0.40) Tranng n prson (-0.93) (2.00) (-1.01) Above average optmsm (0.56) (1.40) (-1.99) No pror ncarceraton (0.12) (-1.77) (1.70) One pror ncarceraton (0.24) (-1.70) (1.45) Prson length (-2.76) (1.56) (1.68) Drugs offence (0.86) (0.83) (-1.70) Major offence (-0.87) (0.81) (0.08) Predcted real hourly wage (1.30) (-0.57) (-0.72) Mnmum-securty prson (-0.20) (1.33) (-1.09) χ 2 (32) McFadden R Predcton success Sample 328 Note: t-rato n parentheses. The standard errors are derved from a consstent varance-covarance matrx usng Huber- Whte sandwch estmators. There are a number of factors that affect the labour market choces of prsoners. Frst, compared to female prsoners, male prsoners are 30 percentage ponts more lkely to return to ther last job after ther release from prson. Second, age has a negatve effect on the probablty of prsoners changng career after ther 22

24 release from prson and a postve effect on them leavng the labour market. Ths may reflect dffcultes of fndng employment among older age groups. It can also reflect deprecaton/obsolescence of human captal sklls among the older age group. Whlst the tranng receved n prson ncreases the lkelhood of prsoners changng ther career after leavng prson by 12 percentage ponts, t does not matter to those who wsh to ether return to ther prevous pad jobs or ext the labour market. Ths suggests that for prsoners who wsh to return to ther last pad jobs or who choose not to partcpate n the labour market; tranng n prson may be vewed as fllng n tme. The mpact of optmsm affects prsoners labour market choces dfferently. Prsoners who are more optmstc are less lkely to leave the labour market after leavng prson, whle optmsm does not appear to nfluence the decson of prsoners to ether return to ther last pad jobs or change career. A number of nteracton terms are ncluded n the multnomal logt. These are the same nteracton terms entered nto the employment model (see Table 2). We want to see f the frequency of ncarceratons affects certan characterstcs of prsoners whch may affect labour market actvtes after ther release from prson. If the frequency of ncarceratons affects certan characterstcs of prsoners to reduce ther employablty, then t s reasonable to assume that t may also lmt the choces prsoners have after leavng prson. These results are presented n Table 4. It should be noted that ths table contans the coeffcents of the nteracton terms only. 17 An nteracton term between number of ncarceratons and age s used to capture the mpact of frequency of ncarceratons on labour market aspratons of prsoners as they age. The second nteracton term between the number of ncarceratons and male measures the mpact of frequency of ncarceraton on labour market aspratons 23

25 between male and female prsoners. The fnal nteracton term between number of ncarceratons and ndgenous measures the mpact of frequency of ncarceratons on labour market aspratons between ndgenous and non-ndgenous prsoners. Table 4 Margnal Effects of the Probablty of Labour Market Aspratons Interacton Terms Return to Last Job () Change Career () Ext Labour Market () Varable Coeffcent Coeffcent Coeffcent No pror ncarceraton x age (-0.68) (0.01) (0.71) No pror ncarceraton x male (1.58) (-1.47) (0.03) No pror ncarceraton x ndgenous (0.12) (-0.71) (0.73) One pror ncarceraton x age (0.84) (0.36) (-1.28) One pror ncarceraton x male (1.08) (-1.80) (0.77) One pror ncarceraton x ndgenous (0.30) (-0.53) (0.26) Note: t-ratos n parentheses. The standard errors are derved from a consstent varance-covarance matrx usng Huber-Whte sandwch estmators. As ndcated n Table 4, the only sgnfcant varable s the nteracton term between number of ncarceratons and gender. The result shows that compared to those wth multple mprsonments, men wth one prevous mprsonment are less lkely to change careers after ther release than female prsoners who had been ncarcerated once before. Overall, the results on the nteracton terms suggest that frequency of ncarceratons does not have a negatve effect on personal characterstcs whch may hnder ndvduals employment prospects after ther release. Incluson of the nteracton terms, however, changes the sgnfcance of four varables n the multnomal logt model. Namely, the gender varable becomes nsgnfcant n determnng the ntenton to return to the last job pror to current ncarceraton. Wth regard to the ntenton of changng career after mprsonment, age 24

26 and two varables measurng pror ncarceratons are now nsgnfcant. The other varables appear to be robust across model specfcatons. VI. Concluson In ths paper prsoners employablty before ncarceraton and ther labour market aspratons after release are examned. A number of mportant mplcatons can be suggested from the results. Frst, a number of personal characterstcs (e.g., gender, age) that reduce the employablty of prsoners before ther current ncarceratons also reduce ther labour market aspratons after release. Ths suggests that certan prsoners may be long-term dsadvantaged n the labour market. Second, part of the lack of labour market success among ex-prsoners may be the stgma attached to crmnalty. Employers may be reluctant to employ ndvduals who have a crmnal record. It appears that f ex-prsoners were treated n the same way n the labour market as the general populaton, they would have hgher employment success. However, t s problematc to attrbute the dfference n employablty between prsoners who are frst tme offenders and those who are repeat offenders to a specfc factor. Hence, further work s needed n order to confrm that the lack of employment among prsoners s due to employers hrng preference and not due to other factors. In order to ncrease the predctablty of the labour market actvty of prsoners after ther release, nformaton on employers atttudes to prsoners and what prsoners actually do after ther release s needed. Importantly, the mmedate post-release perod s crtcal n confrmng labour market choces for exprsoners. Fnally, whle the data show that 55 percent of prsoners ntend to be actvely nvolved n the labour market after ther release from prson, 45 percent of prsoners 25

27 do not ntend to partcpate. The ntended absence from the labour market s qute hgh compared to the general populaton s actual non-labour market partcpaton rate of 36 percent n 2004 (Australan Bureau of Statstcs 2004). Prevous studes have shown that lack of labour market success ncreases the probablty of crmnal actvtes. Hence, to reduce the rate of re-offendng, ex-prsoners should be asssted to fnd employment. Whle we cannot drectly observe labour market actvtes after ncarceraton wth the current data set, we have shown possble dverse labour market aspratons among prsoners. Therefore, t would be useful to obtan data whch allows researchers to drectly observe labour market actvtes of prsoners after ncarceraton. In addton, t would be useful to gauge the mpact of correctonal authorty job placement servces on the employablty of ex-prsoners, ncludng duraton of job search and job turnover of frst job n the mmedate post-release perod. 26

28 Appendx Defnton of Varables Dependent Varables Employment: Ths varable s set equal to unty f the ndvdual was employed n the four weeks pror to ther current ncarceraton. Hourly wage: Ths varable s computed from the real hourly wage of the most recent pad job pror to the current prson sentence. For hourly wage (where applcable) the mdpont of each band was used to construct a contnuous measure of ncome. The open-ended upper lmt was gven a value of 1.5 tmes the lower threshold. There are 23 wage bands. The frst 16 bands have ncrements of $1. The next sx bands have ncrements of $5 and the fnal wage band s open-ended. The dependent varable used n ths study s the natural logarthm of real hourly wage. The real wage s computed at prces. Worked pror to current prson sentence: Ths varable s set equal to unty f the ndvdual worked n the fve years pror to comng to prson. Labour market aspratons: Three categores of labour market aspratons are dstngushed: () return to last pad job held pror to comng to prson; () change career path or do somethng postve wth one s lfe (e.g., undertake further study, look for better jobs, new job); and () do not go back to the last pad job because of crmnal record (and other reasons) or extng from the labour market. Benchmark group s category (). 27

29 Independent Varables Male: Ths varable s set equal to unty f the ndvdual s male. Females are assgned a value of zero. Brthplace: Ths s a set of three varables each set qual to unty for: () nonndgenous Australan-born; () ndgenous; and () overseas born. Benchmark group s the non-ndgenous Australan-born prsoners. Years of educaton: Ths varable measures the hghest level of educatonal attanment pror to the current prson sentence. Hgh sklled jobs pror to prson: Ths varable s set equal to unty f the ndvdual was employed as managers & admnstrators, professonals or assocate professonals n the most recent job pror to comng to prson. Tranng n prson: Ths varable s set qual to unty f the ndvdual undertakes some tranng programmes durng ther current ncarceraton. Ths ncludes tranng and educaton or tranng and work or a combnaton of educaton, tranng and work. Marred: Ths varable s set equal to unty f the ndvdual lves wth a spouse or partner when not n prson. Chldren: Ths varable s set equal to unty f the ndvdual has chldren. 28

30 Resde n metropoltan area: Ths varable s set equal to unty f the ndvdual resdes n a metropoltan area n Perth when not n prson. Optmsm ndex: Ths varable has a vald range from zero to 32 ponts. Hgh values ndcate a hgh degree of optmsm whle low values ndcate a low degree of optmsm. The ndex s computed from eght statements from the Lfe Orentaton Test (LOT) from Scheer and Carver (1985). The optmsm ndex (LOT score) s the sum of the response values (detals can be obtaned from the authors). Above average optmsm: Ths varable s set equal to unty f the ndvdual has an optmsm score above the sample average optmsm score. No pror ncarceraton: Ths varable s set equal to unty f the ndvdual has no pror mprsonment. One pror ncarceraton: Ths varable s set equal to unty f the ndvdual has one pror mprsonment. Prson length: Ths varable measures the length of the current sentence (n months). Drugs offence: Ths varable s set equal to unty f the ndvdual s most serous reported offence for the current prson sentence nvolves drugs. Major offence: Ths varable s set equal to unty f the ndvdual s most serous reported offence for the current prson sentence nvolves money and or property and 29

31 aganst people (e.g., robbery wth volence) or offences aganst people (e.g., homcde, assault, sex offences). Mnor offence: Ths varable s set equal to unty f the ndvdual s most serous reported offence for the current sentence nvolves money and/or property (wthout volence) or other offences (e.g., drnk drvng, resstng arrest, unpad fnes). Predcted real hourly wage: Ths varable s computed from the real hourly wage rate receved from the last pad job pror to ncarceraton. Unemployment rate: Ths varable measures the average annual unemployment rates for the startng year of each prsoner s current ncarceraton. Mnmum-securty prson: Ths varable s set equal to unty f the ndvdual s held at a mnmum-securty prson. 30

32 REFERENCES Australan Bureau of Statstcs (2001), Successful and Unsuccessful Job Search Experence, Australa, July 2000, Cat No (2004), Labour Force Australa, June, Cat No Batchelder, J.S. and J.M. Pppert (2002), Hard Tme or Idle Tme: Factors Affectng Inmate Choces Between Partcpaton n Prson Work and Educaton Programs, Prson Journal, 82, Blnder, A. (1973), Wage Dscrmnaton: Reduced Form and Structural Estmates, Journal of Human Resources, 8, Bosher, R. and D. Johnson (1974), Does Convcton Affect Employment Opportuntes, Brtsh Journal of Crmnology, 14, Chrcos, T.G. and M.A. DeLone (1992), Surplus Labor and Punshment: A Revew and Assessment of Theory and Evdence, Socal Problems, 39, Commonwealth of Australa (2005), Australan Government Commonwealth Budget, Commonwealth of Australa, ACT. Department of Employment Educaton Tranng and Youth Affars (1998), Job Seeker Classfcaton Instrument, DEETYA, ACT. 31