Abstract 

We examine how municipal procurement shapes firms' labor share. Merging procurement records for Italian municipalities (2011–2018) with firm‑level data, we find that larger per-capita spending modestly but significantly reduces the labor share. The decline reflects productivity gains that outpace wage growth and is confined to North‑Center municipalities, where procurement spending is greatest. Public spending may favor capital unless contracts include clauses on wages, hiring, or training.

This publication was funded by the European Union - Next Generation EU, Mission 4 Component 2, under the PRIN 2022 call, project “REWIND – Resilient Enterprises and Workers: leveraging INtangibles to address Disruptions” (2022XJHRCJ) - CUP E53D23006510006.