We estimate the causal effect of parental incarceration on children’s medium-run outcomes
using administrative data from Sweden. Our empirical strategy exploits exogenous variation
in parental incarceration from the random assignment of criminal defendants to judges with
different incarceration tendencies. We find that the incarceration of a parent in childhood
leads to significant increases in teen crime and pregnancy and a significant decrease in early-life
employment. The effects are concentrated among children from the most disadvantaged families,
where teen crime increases by 18 percentage points, teen pregnancy increases by 8 percentage
points, and employment at age 20 decreases by 28 percentage points. In contrast, there are no
detectable effects among children from more advantaged families. These results imply that the
incarceration of parents with young children may increase the intergenerational persistence of
poverty and criminal behavior, even in affluent countries with extensive social safety nets.