Change in Income Packaging Before and After Prison

Abstract

Objective

Apply the concept of income packaging to formerly incarcerated men by examining how an individual's income portfolio changes from pre- to post-incarceration, in terms of total income, source-specific income, and income shares.

Method

A zero-inflated Poisson model is used to examine changes in income likelihood (extensive margin) and amount (intensive margin), both for total income and five different income sources (formal work, public assistance, informal work, illegal activities, and other sources). To examine changes in all income shares simultaneously, a fractional estimator represents a multinomial logistic regression of proportions (the proportion of total income from each of five sources).

Results

Individuals experience substantial income loss upon release from prison. Formal employment and public assistance are highly stable sources of income. There is no reduction in the number of workers, but workers do experience decay in earnings. Public assistance serves as an important safety net upon release, as more individuals rely on it after imprisonment.

Conclusion

The findings reveal how returning individuals make ends meet from smaller budgets and highlight the potential utility of concepts as income packaging and bureaucratic capital in refining theories and understanding the financial wellbeing of released individuals.