Abstract
Abstract Objective We examine the economic consequences of choosing between higher education and correctional facilities for rural communities seeking economic development. Because rural areas have lagged behind urban areas in their pursuit of economic development, some areas rely on the employment boost from attracting prisons and other incarceration facilities, while others try to attract or expand facilities of higher learning. Methods Using Census and QCEW data, we employ a quasi‐experimental analysis to examine the relative merits of both approaches for economic development for rural California. Evaluating average wage per worker along with industrial diversity and employment measures, we compare rural California counties that have prisons to those that have higher education versus a control group without such public investments. Results Our results show that while correctional facilities can generate regional growth, the economic development offered by higher education appears to have more substantive long‐term benefits stemming from larger population growth, wealthier proprietorships, and a decline in a county's dependence upon government as a source of its income. Conclusions We conclude that universities help build regional coalitions and linkages that reenforce economic development for a rural community as well as providing a skilled labor force and cultural opportunities that a rural prison does not.