The Local Economic Impacts of Prisons

I examine the economic consequences of prisons on local communities using two complementary approaches. The first uses prison openings during the 1990s across the US and the second exploits the results of the prison site-selection competitions in Texas. Prisons bring substantial gains in public employment and dampen the responsiveness of local labor markets to macroeconomic shocks, consistent with the view that prison jobs are “recession-proof.” However, prisons fail to create substantial spillovers to other sectors or provide a major boost to local economies. Neighborhoods closest to prisons also experience declines in housing values and demographic shifts towards low-socioeconomic status households