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Crime is ubiquitous in adolescence, and a considerable number of young people are arrested
by the police. Previous research has demonstrated that arrests can impede the healthy transition of juveniles into adulthood. However, little is known about how people differ in their susceptibility to such negative health consequences. The current study addresses this limitation by exploring whether arrestees’ peer networks moderate the effects of police contact on healthy development. In particular, it seeks to answer the following questions: First, how is adolescent arrest associated with subsequent healthy development? Second, to what extent does an adolescent’s peer context amplify or attenuate the consequences of arrest for healthy development? To address these questions, we use data from PROSPER, a longitudinal study that started data collection from about 11,000 students in 28 public school districts in Iowa and Pennsylvania in 2002 and 2003. A comprehensive panel analysis shows how the impact of police arrests on various health outcomes (e.g., internalizing symptoms, self-cutting behavior, and substance use) varies by the peer context (e.g., peers’ deviant behaviors). Our findings serve to advance labeling theory and assist juvenile justice agents in identifying those with the highest risk of suffering impaired health developments from police arrest.