Subcontracting in Federal Spending: Micro and Macro Implications
Journal: National Bureau of Economic Research
Year: 2026

This paper studies the critical but underexplored role of subcontracting in shaping the spatial and firm-level effects of federal government spending.Using newly available data on defense subcontract awards linked to establishment-level data from NETS, we examine primesubcontractor relationships across regions, industries, and over time.We document three key facts.First, subcontracting reallocates a substantial share of federal dollars across geographic areas, weakening the link between the loca