Economic Development Subsidies and the Funding of Private Prisons

Abstract

For-profit prison corporations have sold prison privatization as a tool for economic development. The idea of prisons became more appealing once for-profit prison corporation demonstrated that they could finance, build, design, and construct prisons with private capital from private investment companies. Many private prisons throughout the United States are provided local, state, and federal economic development subsidies — which may include tax advantaged financing, property tax abatements, infrastructure improvements, and personnel training and development resources. Most research on prison privatization has examined costs and quality comparisons of private run prisons to government run correctional facilities. This article examines the factors that predict economic development subsidies to private prisons, which include: economic, social control, geographic, and political factors. Logistic regression results indicate the per capita gross state product, political ideology, black male disenfranchisement, and mandatory sentencing laws predict economic development subsidies to private prison corporations.

Keywords:

• prison privatization
• economic development subsidies

Notes

¹This research is limited given its cross-sectional design and its small number of observations. A small number of observations directly impacts the statistical power and generalizability of the model. However, a ratio of five observations for every independent variable is generally considered acceptable (Hair, et al., 1998). The model in this article conforms to this general rule.

²−.000039*6077 = .23 or 23 percent. .23*17 = 3.91, rounded to 4.