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The Value of Revolving Doors in Public Procurement

Klenio Barbosa and Stephane Straub ()

No 17-873, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: This paper investigates the impact of revolving door movements on public procurement outcomes. We combine 10 years of procurement contracts in the Brazilian health sector with a comprehensive employer-employee dataset tracing individual job experience and characteristics to identify how movements of individuals between public administrations and private providers affect the total number of contracts, quantities, and acquisition prices. We analyze career changes in both directions between public bodies and private suppliers, and provide evidence of significant direct effects, spillovers to other firms and administrations, impact on workers’ remuneration, and on aggregate spending. We uncover positive and negative effects of revolving door on the efficiency of procurement, which are, respectively, consistent with reward for high-skill workers’ signaling competence and collusive behavior. In particular, we find that effects of administration-to-supplier connections are beneficial to public bodies, while effects of supplier-to-administration ones are detrimental. Their aggregate impacts on spending are, respectively, –3% and +2% of total procurement outlays. These results point to specific and unexpected policy implications related to the tolerance of revolving door practices.

Keywords: Procurement; Revolving door; Public Officials Career Path; Personnel Economics (search for similar items in EconPapers)
JEL-codes: D72 D73 H11 H57 J45 (search for similar items in EconPapers)
Date: 2017-12
New Economics Papers: this item is included in nep-lma
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