Inequality Beyond the Wall: The Effects of Incarceration on Long-Term Earnings and Employment

This thesis examines the relationship between socioeconomic inequalities and incarceration in Aotearoa New Zealand through an analysis of long-term earnings and employment status among formerly incarcerated people. Previous literature has established that the New Zealand prison population reflects existing inequalities through the disproportionate incarceration of Māori and people with lower socioeconomic backgrounds. However, the role of incarceration in generating new patterns of inequality is not well understood. This thesis addresses this gap in the literature, adopting a quantitative methodology to measure the systemic effects of incarceration in Aotearoa New Zealand. The study draws on administrative data from the Integrated Data Infrastructure, examining economic outcomes for a cohort of people who received a first-time prison sentence during young adulthood. Propensity score matching identified a group sharing similar characteristics, but without experiences of incarceration, in order to make comparisons between the outcomes of these two groups. Linear mixed effects models were then used to estimate the effect of incarceration on earnings from ages 25 to 40, spanning the early and mid-career stages. This is supplemented by an analysis of employment rates within both groups. The research adopts an intersectional approach to examine economic outcomes across social groups, with a focus on the interactions between race and gender. The key finding of the research is an average annual wage penalty of around NZ$13,400 attributed to the effect of incarceration. This penalty increases over time, resulting in an average NZ$236,000 in lost wages for a formerly incarcerated individual across the 15-year span of the study. Additionally, when comparing across gender and racial sub-groups, Māori and Pacific people are more greatly impacted than their Pākehā/European counterparts and, over the span of the study, formerly incarcerated Māori women experienced the greatest proportional loss of wages. The findings demonstrate that incarceration exerts a strong negative influence on subsequent economic opportunities in the form of a significant wage penalty. Furthermore, already marginalised groups experience the greatest impacts of incarceration, which exacerbates existing racial and gender wage gaps. This thesis argues that incarceration embeds existing patterns of inequality in Aotearoa New Zealand through the compounding effects of hyperincarceration and reduced economic opportunities amongst marginalised communities.