Discussion paper
DP19056 Criminal Records
We present a dynamic model of the labor market, where workers may commit crimes and employers can gather information about workers' criminal history from a publicly available record. The record provides valuable information with regard to a worker's propensity to commit crimes, but also lowers the worker's deterrence after crimes are committed and hence enhances recidivism. The optimal expungement policy — that is, the timing of removal of crimes from the record — balances these two opposite effects. We show that, when the social harm from crimes is neither too high nor too low, it is optimal to impose finite nonmonetary sanctions followed by a finite criminal-record period.
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