Public Procurement and Supplier Job Creation: Insights from Auctions

Public procurement contracts (PPCs) of goods, services and works is about one tenth global gross domestic product. Much research has been conducted on government spending its aggregate effects, but evidence scarce at the micro-level. This study exploits sealed-bid PPC auctions construction works, discontinuity in bidders' win margin firms' daily employment variation to provide a causal estimate winning employment. Winning small positive impact firm's short-run The investigates mechanisms heterogeneity that can explain initial magnitudes. No compelling found favour political connections, an information leakage channel or size as explanations for magnitude. A investigation longer period shows phases out less than year. lack long-term due runners-up more PPCs substituting towards market revenue year after closely losing PPC. Finally, impacts are concentrated firms conduct majority contracted work in-house. final estimation effect four new employees per with public cost job created €45,200 [€34,200 - €66,200].