Criminal convictions result in expected losses due to stigmatization. The magnitude of these losses depend on, among other things, the convict's future expected earnings. People who face larger wage reductions due to convictions suffer more from stigmatization. This leads to under- and over-deterrence problems, because people at different occupations face different expected sanctions associated with the commission of a crime. One of these problems, namely over-deterrence, can be mitigated or eliminated by offering convicts a costly opportunity to seal their criminal records. To demonstrate this, I construct a Beckerian model of law enforcement that incorporates stigma a la Rasmusen (1996) and where criminals have the option of expunging their criminal records at a cost chosen by the government. I use this model to identify relationships between equilibrium crime rates, expungement rates, formal sanctions, and the average pay of occupations. I argue that record sealing is also likely to perform a screening function to sort out people with low criminal tendencies (who have either been erroneously convicted or who have impulsively and in exceptional circumstances committed a crime) from people who have high criminal tendencies. Finally, I consider various legal reforms in light of my findings.
Available at: http://works.bepress.com/mungan/23/