The interrelationships between arrest and employment: More evidence on the social determinants of Indigenous employment

Abstract

Preliminary analysis of the 1994 National Aboriginal and Torres Strait Islander Survey (NATSIS) indicates that arrest is one of the major factors underlying the poor employment prospects of the Indigenous population. Unfortunately, these early studies could not determine the direction of causality between arrest and employment. This paper addresses this problem by distinguishes the employment effect of the arrest from the effect of the unobservable characteristics of those arrested.

The experience of arrest among Indigenous Australians reduces the probability of being in employment by between

13 to 20 per cent for males, and 7 to 13 per cent for females. Differences in arrest rates between Indigenous and non-Indigenous Australians may explain over 20 per cent of the difference in employment/population ratios between those groups.

There are a number of reasons why arrest reduces employment prospects. If a person who has been arrested is stigmatised by employers, they are less likely to obtain employment Alternatively, employers may be deterred from locating in regions with high levels of criminal activity and hence there may be limited employment opportunities for persons living in those regions. On the supply side, contact with the criminal justice system may affect a person's motivation to work, or perceptions of the expected benefits from seeking employment. Unfortunately, it is not possible to distinguish between supply and demand side influences of arrest.

This paper illustrates the importance of social factors in determining Indigenous employment. The significance of general socioeconomic indicators, such as whether a person voted in a recent election or whether they have a long-term health condition, means that labour economists should consider controlling for such factors, wherever possible.

This study also confirms that removal from family environment has an adverse impact on the final socioeconomic status of individuals with the experience of arrest being the mode of transmission of disadvantage. Being taken from one's natural family increases the probability of arrest, but does not directly influence the employment outcome. This result contradicts the claims of certain demagogues who believe that members of the 'stolen generation' benefited from being taken away from their families. The statistical evidence clearly indicates that the average member of this generation has not experienced improved economic outcomes through greater employment opportunities.

The effect of arrest on employment differs by reason for most recent arrest. Persons whose most recent arrest was for a drinking-related offence or on an outstanding warrant appear to have lower employment probabilities than persons arrested for theft or assault.

The preponderance of alcohol-related offences in the Indigenous population also emphasises the direct benefits of decriminalising drunkenness. With 12.4 per cent Indigenous males having been arrested in the previous five years for public drunkenness and disorderly conduct, more than 10 per cent of the differential employment rates between the Indigenous and non-Indigenous population may be eliminated by changing the law(s) which fail to recognise cultural differences between Indigenous and mainstream Australian societies.

The findings of this paper resonate with the recommendations of the Royal Commission into Aboriginal Deaths in Custody. In particular, ensuring that Indigenous citizens stay out of jails should be a priority policy issue for governments who are concerned about Indigenous employment outcomes.