Objectives. It is widely believed that prison construction offers significant economic benefits to local areas. We review the popular and scholarly literature and provide a quantitative analysis of claims.
Methods. We analyze data on all existing and new prisons in the United States since 1960 to assess the impact of these prisons on the pace of public, private, and total employment growth in U.S. counties from 1976 to 2004.
Results. Our results suggest that enhanced human capital is associated with employment gains and cast doubt on the assertion that prisons provide economic benefits to local areas. We provide evidence that prison construction impedes economic growth in rural counties, especially in counties that lag behind in educational attainment.
Conclusions. Based on empirical results, this research casts further doubt on claims that prisons offer a viable economic development option for struggling rural communities. Possible explanations for the failure of prisons to help local areas are explored, including existing corrections officers moving to fill openings, adverse local impacts of prison labor, and paucity of local multipliers when a prison opens.