The Impact of Mass Incarceration on Poverty

Abstract

During the past 30 years, U.S. poverty has remained high despite overall economic growth. At the same time, incarceration rates have risen by more than 300%, a phenomenon that many analysts have referred to as mass incarceration. This article explores whether the mass incarceration of the past few decades impeded progress toward poverty reduction. Relying on a state-level panel spanning 1980 to 2004, the study measures the impact of incarceration on three poverty indexes. Estimates are generated using instrumental variable techniques to account for possible simultaneity between incarceration and poverty. The evidence indicates that growing incarceration has significantly increased poverty, regardless of which index is used to gauge poverty. Indeed, the official poverty rate would have fallen considerably during the period had it not been for mass incarceration.