Public Procurement and Supplier Job Creation: Insights from Auctions.

This article examines the micro-level impact of public procurement contracts (PPCs) on employment in Croatian construction firms, exploiting sealed-bid auction data, daily employment records, and a "winner-runner-up" identification strategy. The study finds that winning a PPC leads to a small but positive short-run increase in firm employment—about 2.7 employees on average—primarily among male workers hired on fixed-term contracts for lower-education positions, with many new hires likely being foreign nationals. The effect dissipates within a year, partly because runners-up secure additional smaller PPCs and substitute public contracts with private market work. The employment impact is concentrated in firms conducting most contracted work in-house, with an estimated public cost per directly created job of approximately €58,600. The research also shows that auction competition reduces costs and the likelihood of politically connected firms winning contracts, and finds no strong evidence of information leakage affecting auction outcomes.