From Prison to Entrepreneurship: Can Entrepreneurship be a Reentry Strategy for Justice-Impacted Individuals?

• DOI: http://doi.org/10.1177/00027162221115378
• Published date: 01 May 2022
• Date: 01 May 2022
• Subject Matter: Improving Human Capital and Labor Market Opportunities

114 ANNALS, AAPSS, 701, May 2022

DOI: 10.1177/00027162221115378

From Prison

to Entre pre-

neurship: Can

Entre pre neurship

be a Reentry

Strategy for

Justice-

Impacted

Individuals?

By

KYLIE JIWON HWANG

1115378ANN THE ANNALS OF THE AMERICAN ACADEMYFROM PRISON TO ENTREPRENEURSHIP

research-article2022

Justice-impacted people face significant obstacles to

employment. This article explores an alternative path-

way for these individuals to find work and income:

entrepreneurship. While anecdotal evidence suggests

that entrepreneurship is common among people with

criminal histories, it remains both theoretically and

empirically underexamined. I conduct a synthesis of

recent research to assess the viability of entrepreneur-

ship as a path to reintegration for returning citizens. I

highlight findings on the prevalence of entrepreneurial

entry, the underlying mechanism behind entrepreneur-

ship, the economic and social consequences of entre-

preneurship, and the barriers and challenges that

reentering entrepreneurs face. Finally, I draw attention

to key policy implications and suggest new initiatives

that can help enhance the viability of entrepreneurship

as a reentry strategy for justice-involved individuals.

Keywords: entrepreneurship; justice-impacted indi-

viduals; labor market discrimination; pol-

icy implications

Introduction

Individuals with criminal records face significant

obstacles to employment in the United States

(Pager 2003; Pettit and Western 2004; Holzer,

Raphael, and Stoll 2003). These employment

barriers lead to unsuccessful reentry for return-

ing citizens, as well as persistent economic and

social inequality (Western 2002; Uggen 1999).

As a response to such negative consequences,

scholars and policy-makers have focused on

Kylie Jiwon Hwang is a postdoctoral scholar at Stanford

Graduate School of Business. She will be joining the

Kellogg School of Management at Northwestern

University as an assistant professor in July 2023. She

received her PhD in management from Columbia

Business School. Her research lies in the intersection of

entrepreneurship, incarceration, and discrimination.

Her dissertation focused on entrepreneurship as a way

to overcome labor market discrimination for formerly

incarcerated individuals in the United States.

Correspondence: jkhwang@stanford.edu

FROM PRISON TO ENTREPRENEURSHIP 115

improving the opportunities in wage employment for returning citizens. Yet

employment is only one of the channels through which justice-impacted people

find work and income. Anecdotal evidence and recent media reports suggest that

justice-involved individuals exhibit a keen interest in an alternative pathway to

reentry: entrepreneurship. While nascent research suggests that launching one’s

independent business is a common route for people with criminal histories, it

remains both theoretically and empirically underexamined as a strategy to achieve

successful reentry and economic and social mobility.

This article conducts a synthesis of the burgeoning literature to assess the

viability of entrepreneurship as an alternative to wage employment for returning

citizens. The key questions addressed are as follows: Is entrepreneurship preva-

lent among individuals with criminal records? Why do returning citizens pursue

entrepreneurship? What are the short- and long-term economic and social con-

sequences of entrepreneurship for justice-involved individuals? Do returning

citizens face barriers and challenges to entrepreneurship? Finally, what are the

potential policy reforms and initiatives to support and facilitate entrepreneurship

among the justice-involved population?

I first illustrate the prevalence of entrepreneurship as a labor market choice

made by returning citizens. Recent research has established that justice-impacted

individuals pursue entrepreneurship at high rates, particularly higher than that of

similar non-justice-impacted individuals (e.g., Hwang and Phillips 2020; Bushway

etal. 2021; Finlay, Mueller-Smith, and Street 2022). To further explain this trend,

I explore the underlying mechanisms driving individuals with criminal histories

into entrepreneurship. Evidence suggests that entrepreneurship in this popula-

tion owes not only to individual-level factors—like risk preferences and disposi-

tions (Fairlie 2002; Gottschalk 2009)—but also structural factors that stem from

barriers to employment (Hwang and Phillips 2020).

Given the prevalence of entrepreneurship as a career choice for returning citi-

zens, this article investigates the characteristic outcomes of entrepreneurship

among returning citizens. Both quantitative and qualitative work documents that

entrepreneurship helps mitigate the income gap (Hwang and Phillips 2020) and

boost long-term economic mobility (Hwang 2021b), as well as reduce recidivism

(Sonfield 2013; Cooney 2012; Hwang and Phillips 2020), in comparison to wage-

employment and unemployment. While such positive outcomes from entrepre-

neurship establish the benefits of launching one’s own business for returning

citizens, the process to building and sustaining a successful business is freighted

with challenges and barriers. I proceed to explore the challenges that impede

successful entrepreneurial entry for the justice-involved people, charting barriers

to financial, human, and social capital.

Finally, having analyzed entrepreneurship’s drivers, outcomes, and barriers

among returning citizens, I discuss how such evidence can inform policy that is

NOTE: This research is generously supported by the Ewing Marion Kauffman Foundation,

REFORM Alliance, and Columbia Justice Lab at Columbia University. The author thanks

Bruce Western, David Harding, and Jasmin Sandelson for their comments and suggestions.

The contents of this article are solely the responsibility of the author.