The Employee Costs of Corporate Debarment in Public Procurement
American Economic Journal: Applied Economics
vol. 15,
no. 1, January 2023
(pp. 411-41)
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.Citation
Szerman, Christiane. 2023. "The Employee Costs of Corporate Debarment in Public Procurement." American Economic Journal: Applied Economics, 15 (1): 411-41. DOI: 10.1257/app.20200669Additional Materials
JEL Classification
- D73 Bureaucracy; Administrative Processes in Public Organizations; Corruption
- E26 Informal Economy; Underground Economy
- H57 National Government Expenditures and Related Policies: Procurement
- H83 Public Administration; Public Sector Accounting and Audits
- J31 Wage Level and Structure; Wage Differentials
- K42 Illegal Behavior and the Enforcement of Law
- O17 Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
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