Review of Industrial Organization (2005) 27:1–16 © Springer 2005
Industries Behind Bars: An Economic
Perspective on the Production of Goods and
Services by U.S. Prison Industries
FREDERIC L. PRYOR
Department of Economics, Swarthmore College, 500 College Avenue, Swarthmore, PA
Abstract. This note focuses on two key issues about production in U.S. prisons for sale
to customers outside their walls: the relative labor productivity and wages of these prison
industries compared with other U.S. industries; and the types of goods and services that
these prison industries produce. The results are drawn, in part, from my own survey of
state prison industry directors.
Key words: prison industries, production.
Government ofﬁcials justify the establishment of industries inside pris-
as a means to reduce recidivism by providing inmates with work
skills and proper attitudes toward work for their employment upon leaving
prison. Other motives include reducing prison idleness and potential trou-
ble-making by bored inmates and offsetting some of the costs of incarcer-
ation. Many policy questions, however, swirl about these industries: Where
should their goods be sold and at what prices? How should these industries
be managed? How much should the inmates be paid? Arguments about
these and related issues have raged for a century.
Most such discussions are, however, strangely silent about the actual
production of prison industries and, equally important, what goods and
services are most appropriate for the special labor force conditions that
these prisons face. Moreover, up to now some key economic parameters of
these prison industries have been unavailable, scattered, or incomplete.
I use “jails” only for correctional institutions under cities or counties jurisdiction
and “prisons” only for such institutions under state or federal jurisdiction. The technical
difference between jails and prisons is more strict and rests on the length of the sentence
of their inmates.