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Declining Employment among Young Black Less-Educated Men

The Role of Incarceration and Child Support

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Document date: April 01, 2004
Released online: April 01, 2004

The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.

Note: This report is available in its entirety in the Portable Document Format (PDF).

I. Introduction

During the 1990s, employment rates among young and less-educated minority women—particularly African-Americans—increased quite dramatically. This increase is generally attributed to a combination of welfare reform policies, expansions of the Earned Income Tax Credit (EITC) and other supports for working poor families, as well as a very robust labor market during that time period (Meyer and Rosenbaum 2001; Blank 2003).

In contrast, the employment rates of young less-educated black men continued their long secular decline during this time period. Though young less-educated black men did benefit from the economic boom of the 1990s, and the wages of those in the labor force seemed to rise in this period, the boom was not sufficient to offset the negative secular trend that has been reducing employment and labor force activity among these young men for the past several decades Furthermore, there has been little good evidence to date about why this trend has continued in the 1990s, despite positive trends in educational attainment and reductions in criminal activity for this group.1

In this paper, we explore the effects on the labor force activity of young less-educated black men from two relatively recent developments: (1) The dramatic rise in the share of young black men who have been incarcerated during the past two decades; and (2) Growing enforcement of child support orders in that time period. Both these factors disproportionately affect young black men; and both are likely to limit the employment rates of those affected. But, until now, little good empirical evidence has been generated that links these developments to the general decline in employment activity for this population.

In this paper we hope to provide such evidence. We begin below by documenting the continuing decline in employment and labor force participation among young black less-educated men, and why previous explanations in the literature for this development do not seem to work for the 1990s. We then discuss the likely negative effects of incarceration and child support policies on these employment outcomes.2 We review the previous literature on both issues, and discuss its strengths and limitations.

We then describe the data we will use to address these issues. We have merged state-level data over the past two decades on black incarceration rates as well as enforcement of child support policies into data from the Outgoing Rotation Groups of the Current Population Survey (CPS-ORG). After providing some summary results on employment rates during this period as well as incarceration and child support policies, we present the results of our estimated regressions linking the latter to the former. In particular, we use a three-year lag on black male incarceration rates as a proxy for the presence of ex-offenders in the black male population of each state, as well as contemporaneous child support data. We provide estimates of these equations estimated by ordinary least squares (OLS) and also by difference-in-difference (DD) methods, where the latter are based on differences between estimated effects for young less-educated black men and white men. We provide some additional evidence from a series of Hausman tests to confirm that the variation in lagged incarceration and child support policies are indeed exogenous; and we provide additional evidence that the child support policy index that we use affects child support outcomes at the state level. Finally, we conclude with some discussion of the implications of these findings for public policy.

Notes from this section

1 See Freeman and Rodgers (2000) and Holzer and Offner (2002) for a discussion of these trends for men ages 16-24. Both these articles provide evidence that the boom did raise employment rates among young black men, but the latter clearly indicates that the increases were not great enough to offset the group's long-term secular decline in employment. In that paper, much of that secular decline remains unexplained, despite controls for local workforce occupational structure and demographics. The recent evidence on wage growth among young black men (e.g., Chandra 2000; Juhn 2003) suggests that their estimated relative earnings growth in recent years has been inflated somewhat by declining labor force participation among the less-skilled. For earlier reviews of literature on this topic see Smith (2000) and Holzer (2000).

2 Since those who are incarcerated do not appear in the usual calculations of employment rates for the civilian noninstitutionalized population, and since the decision to participate in crime is, in any event, jointly determined with employment outcomes and not necessarily causally related, we focus instead on post-incarceration effects among those who are released from prison (i.e., those usually known as "ex-offenders").

Note: This report is available in its entirety in the Portable Document Format (PDF).

Topics/Tags: | Employment | Families and Parenting | Race/Ethnicity/Gender

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