The Impact of Prison Privatization on Prisoner Outcomes: An Empirical Analysis


The purpose of this study is to evaluate differences in prisoner outcomes between public and private prisons in the United States. Theory predicts that when the government contracts with private providers for services that have non-contractible quality, as in the case of privatized prisons, the private providers have an incentive to engage in too much cost reduction because they ignore the adverse effects of non-contractible quality (Hart, Shleifer and Vishny 1997). Prisoner outcomes to be studied include the proportion of sentence served, the number of infractions obtained while in prison, participation in training/ education programs, and recidivism. Research on this topic is needed to inform public policy given the current expansion of prison privatization and a dearth of literature on this topic owing to the complicated nature of prisoner assignment. An innovative instrumental variables approach using the bed capacity of private prisons will be utilized to deal with the lack of random assignment of prisoners to public and private prisons: the staggered entry of private prisons in the 1990-2010 period provides particularly useful shocks to capacity. This study will utilize data on adult prisoners from the Department of Corrections in 10 U.S. states that have had public and private prisons.

Funded By: 
Award Dates: 
July 1, 2013 - June 30, 2014
PARC Grant Year: 
Year 20