Electronic monitoring (EM) has emerged as a popular tool for curbing the growth of large prison populations. Evidence on the causal effects of EM on criminal recidivism is, however, limited, and it is unclear how this alternative to incarceration affects the labor supply of offenders and the outcomes of their family members.
We study the countrywide expansion of EM in Sweden in 1997, wherein offenders sentenced to up to three months in prison were granted the option to substitute incarceration with EM. Our difference-in-differences estimates, which compare the change in the prison inflow rate of treated offenders to that of non-treated offenders with slightly longer sentences, show that the reform significantly decreased the number of incarcerations. Our main finding is that EM not only lowers criminal recidivism but also increases labor supply. Additionally, EM improves the educational attainment and early-life earnings of the children whose parents were exposed to the reform.
The primary mechanisms through which EM operates appear to involve the preservation of offenders’ ties to the labor market, by reducing the barriers to both finding a job and changing employers. Our calculations suggest that the social benefits stemming from EM are about seven times larger than the fiscal savings associated with reduced prison expenditures, implying that the welfare gains from EM could be much greater than previously acknowledged.
