The employee costs of corporate debarment in public procurement

Szerman, Christiane ORCID: 0009-0000-1813-892X (2023) The employee costs of corporate debarment in public procurement. American Economic Journal: Applied Economics, 15 (1). 411 - 441. ISSN 1945-7782

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• https://pubs.aeaweb.org/doi/10.1257/app....

Abstract

This paper studies an anticorruption policy—corporate debarment, or blacklisting—to understand how disclosing illicit corporate practices and the sanctions for these practices affect firm and worker outcomes. Exploiting a policy change in Brazil that imposed stricter penalties for corrupt firms, I find that debarment is associated with a sizable decline in employment and an increase in the probability of exiting the formal sector. I also document that workers' annual earnings fall after debarment. The impacts are driven by lost revenues from government contracts. The results shed light on the costs to workers in weighing the consequences of corruption crackdown.

Item Type:	Article
Additional Information:	© 2024
Divisions:	LSE
Subjects:	H Social Sciences > HB Economic Theory H Social Sciences > HD Industries. Land use. Labor
JEL classification:	D - Microeconomics > D7 - Analysis of Collective Decision-Making > D73 - Bureaucracy; Administrative Processes in Public Organizations; Corruption E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Employment, and Investment > E26 - Informal Economy; Underground Economy H - Public Economics > H5 - National Government Expenditures and Related Policies > H57 - Procurement H - Public Economics > H8 - Miscellaneous Issues > H83 - Public Administration J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J31 - Wage Level and Structure; Wage Differentials by Skill, Training, Occupation, etc. K - Law and Economics > K4 - Legal Procedure, the Legal System, and Illegal Behavior > K42 - Illegal Behavior and the Enforcement of Law O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O17 - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements: Legal, Social, Economic, and Political
Date Deposited:	03 Oct 2024 14:03
Last Modified:	14 Jan 2025 11:12
URI:	http://eprints.lse.ac.uk/id/eprint/125608

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