The Effect of Pretrial Detention on Labor Market Outcomes

Abstract

ObjectiveTo study the effect of pretrial detention on post-verdict labor market outcomes.MethodWe combine Chilean individual administrative data for criminal cases and labor market outcomes to estimate the effect of pretrial detention for first-time defendants on labor outcomes using the Difference-in-differences (DiD) method, controlling by individual fixed effects, and an instrumental variables (IV) approach. The IV approach takes advantage of the quasi-random assignment of judges.ResultsThe IV results show that pretrial detention reduces the probability of having formal employment and the average monthly wage by 39% and 56% during the six months following the final trial verdict. DiD estimation delivers estimates that are between one-third and one-half smaller. The magnitudes of the effects shown continue to be relevant as much as 24 months after the final trial verdict. The negative effect of pretrial detention also exists for accused individuals whose trial does not end with a custodial sentence. The results of our analysis suggest that the negative effect of pretrial detention is (at least) driven by the lasting effect of being excluded from the labor market during the trial, the accompanying social stigma, and the impact of pretrial detention on the probability of post-verdict incarceration.ConclusionDespite the relevant and lasting effects of pretrial detention on labor market performance, the evidence suggests that individuals in both the control and treatment groups keep the same labor dynamics pretrial and posttrial if they return to work immediately after its conclusion. Therefore, conditional on the decision to keep pretrial detention as an ongoing policy, a possible avenue to attenuate the negative effect on labor outcomes is to design public policies that support access to the labor market and finding an employment position immediately following pretrial detentions and trial proceedings.