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Bureaucratic Competence and Procurement Outcomes

Francesco Decarolis, Leonardo M. Giuffrida, Elisabetta Iossa, Vincenzo Mollisi, Giancarlo Spagnolo

NBER Working Paper No. 24201
Issued in January 2018, Revised in June 2018
NBER Program(s):Industrial Organization, Labor Studies, Public Economics

Does a more competent public bureaucracy contribute to better economic outcomes? We address this question in the context of the US federal procurement of services and works by combining contract-level data on procurement performance and bureau-level data on competence and workforce characteristics. Using an instrumental variable strategy, we find that an increase in bureau competence causes a significant and economically important reduction in: i) delays, ii) cost overruns, and iii) number of renegotiations. Cooperation within the office appears to be a key driver of the findings.

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Document Object Identifier (DOI): 10.3386/w24201

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