Leaving the past behind: Effects of clean slate regulation on employment and earnings

Abstract

We investigate the labor market implications of New Zealand’s clean slate initiative. The clean slate regulation allows automatic concealment of criminal records of previously convicted individuals who remain free of convictions for at least seven years (rehabilitation period) since their last sentence. We use detailed administrative data on criminal court charges to identify our sample of previously convicted individuals who are expected to have their criminal records automatically concealed upon completing their rehabilitation period. By linking our sample to high-frequency tax records including information on employment and earnings, we apply a difference-in-differences framework as well as models developed for staggered assignment of a treatment to study the causal mechanisms. Our analysis reveals that the clean slate reform did not affect eligible individuals’ employment propensity, but led to a modest but precisely estimated two-percent increase in monthly earnings of employed individuals.