US counties with prison labor often have lower wage and employment growth.

While labor coercion in agricultural and preindustrial economies is well-studied, few papers address the effects of coercive institutions in an industrial setting (Naidu and Yuchtman, 2013). The most common form of labor coercion in modern times is convict labor: it is still widespread, not only in developing countries but also among the world’s most developed countries. This practice is potentially important to the economy because a large share of labor, working at significantly below the minimum wage, could impose externalities on the broader non-coerced segment of the labor market.

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