Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/271768 
Year of Publication: 
2022
Series/Report no.: 
CESifo Working Paper No. 10124
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
We investigate the impact of public procurement spending on business survival. Using Italy as a laboratory, we construct a large-scale dataset on firms–covering balance-sheet, income-statement, and administrative records–and match it with public contract data. Employing a regression discontinuity design for close-call procurement auctions, we find that winners are more likely to stay in the market than marginal losers after the award and that the boost in survival chances lasts longer than the contract duration. We document that this effect is associated with earnings substitution rather than increased business scale. Regardless of size, contracts that are long-lasting and awarded by decentralized buyers are more impactful for survival prospects. Survivors experience no productivity premium but rather an improvement in their credit position.
Subjects: 
firm survival
firm dynamics
public demand
public procurement
demand shocks
productivity
credit
auctions
regression discontinuity design
JEL: 
D25
D44
H32
H57
Document Type: 
Working Paper
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