The effects of drug abuse treatment on legal and illegal earnings

Abstract

Although recent research has shown that drug abuse treatment reduces drug use and criminal activity in some clients, the impact of treatment on clients' post-treatment labor market behavior is relatively unknown. This study uses data from a longitudinal survey to analyze annual legal and illegal earnings for 2,420 drug abusers. The analysis focuses on two different time intervals—one year before entering a drug abuse treatment program and one year after leaving the same program. It describes client characteristics, labor market variables, and treatment history, and estimates the effects of length of time in treatment on post-treatment earnings. The regression analysis shows that length of time in treatment had a positive (negative) and statistically significant impact on real legal (illegal) earnings following treatment for methadone and residential clients, but the magnitude was small; accounting for possible selection bias had little effect on the results. Although residential clients experienced the largest relative changes in earnings outcomes, simply comparing the direct cost of residential treatment with the benefits from improved legal earnings and lower illegal earnings suggests that additional residential treatment is not cost-beneficial.