How unregulated is the US labor market? The penal system as a labor marketinstitution

Comparative research contrasts the corporatist welfare states of Europe wit h the unregulated U.S. labor market to explain low rates of U.S. unemployme nt in the 1980s and 1990s. In contrast, this article argues that the U.S. s tate made a large and coercive intervention into the labor market through t he expansion of the penal system. The impact of incarceration on unemployme nt has two conflicting dynamics. In the short run, U.S. incarceration lower s conventional unemployment measures by removing able-bodied, working-age m en from labor force counts. In the long run, social survey data show that i ncarceration raises unemployment by reducing the job prospects of ex-convic ts. Strong U.S, employment performance in the 1980s and 1990s has thus depe nded in part on a high and increasing incarceration rate.