The large negative effects of corporate debarment on workers should be an important consideration for governments
Read “The Employee Costs of Corporate Debarment in Public Procurement” by Christiane Szerman here.
Corporate debarment, or blacklisting, is an increasingly popular anti-corruption policy, but comes with costs to workers that should be factored in when governments weigh the consequences of this type of policy. In this VoxDevTalk, Christiane Szerman joins us to discuss her research in Brazil, which introduced the Anti-Corruption Law in 2014 that debarred establishments engaged in corrupt behaviour. After debarment, excluded establishments experience a 47.7% decline in the number of employees, and are 15.1 percentage points more likely to exit the formal sector, while workers see a 22% decline in earnings which is driven by unemployment. In this discussion, Christiane explains what might drive these results, and why these effects are an important consideration for policymakers.