Peru : Trajectories towards Formality

This report is the outcome of very close cooperation with the authorities of the Government of Peru. The authorities have been involved in all stages of the process, going back to the first phase of this programmatic study. The authorities proved i...

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Bibliographic Details
Main Author:	World Bank
Format:	General Economy, Macroeconomics and Growth Study
Language:	English en_US
Published:	Washington, DC 2013
Subjects:	ACCESS TO CREDIT ACCESS TO FINANCE ACCOUNTANT ACCOUNTING ADVISORY SERVICE AVAILABILITY OF DATA BANK ACCOUNTS BANKS BARRIER BID BINDING CONSTRAINT BORROWING BRIBES BROAD ACCESS BUREAUCRATIC OBSTACLES BUSINESS ASSOCIATION BUSINESS ENVIRONMENT BUSINESS INDICATORS BUSINESS NEEDS BUSINESS OPPORTUNITIES BUSINESS PERFORMANCE BUSINESS SERVICES BUSINESSES CAPITAL INVESTMENT CENTRAL BANK CHECKS CLIENT BASE COMPETITIVENESS COMPLIANCE COSTS CONTRIBUTORY SYSTEM CREDIBILITY CREDIT CARDS CREDITORS CURRENCY CUSTOMER BASE DEVELOPMENT BANK DISMISSAL DISMISSED WORKER DRIVERS EARNING ECONOMIC ACTIVITIES ECONOMIC ACTIVITY ECONOMIC AGENTS ECONOMIC GROWTH EMPLOYER EMPLOYMENT EMPLOYMENT PROMOTION ENTERPRISE PROMOTION ENTREPRENEUR ENTREPRENEURS EXCLUSION EXPORT PROMOTION FACE VALUE FINANCE CORPORATION FINANCIAL DEPTH FIRING COSTS FIRM SIZE FOREIGN INVESTMENT GEOGRAPHICAL AREA GREATER ACCESS GROSS DOMESTIC PRODUCT GROSS NATIONAL PRODUCT HEALTH INSURANCE HOME OWNERSHIP HOUSEHOLD SURVEY ID INCOME INCOME LEVELS INCOME TAX INCOMES INFORMAL EMPLOYMENT INFORMAL SECTOR INFORMAL WORKER INSPECTION INSPECTIONS INTELLECTUAL PROPERTY INTERNATIONAL FINANCE INVESTING INVESTMENT CLIMATE JUDICIAL SYSTEM KEY BENEFIT KNOWLEDGE BASE LABOR FORCE LABOR LAWS LABOR LEGISLATION LABOR MARKET LABOR ORGANIZATION LABOR REGULATION LABOR REGULATIONS LABOR RELATIONS LACK OF ACCESS LAW ENFORCEMENT LEGAL DISPUTES LEGAL REQUIREMENT LICENSE LICENSE FEE LICENSES LIMITED LIABILITY LIVING STANDARDS LOAN MANUFACTURING MARKET ACCESS MARKET OPPORTUNITIES MEDIUM ENTERPRISES MICRO BUSINESS MICRO BUSINESSES MICRO ENTERPRISE MICRO ENTERPRISES MICRO ENTREPRENEURS MICRO-ENTREPRENEURS MINIMUM WAGE MINIMUM WAGES MONETARY FUND NEW BUSINESS OPPORTUNISTIC BEHAVIOR PAYMENT OF TAXES PENSION PENSION SYSTEM PENSIONS PERFORMANCE MEASURES PRIVATE SECTOR PROBIT REGRESSION PROCUREMENT PRODUCTIVITY PROFITABILITY PUBLIC SERVICES QUERIES RECEIPTS REGISTRY REGULAR PAYMENT REGULATORY ENVIRONMENT REGULATORY FRAMEWORK REGULATORY FRAMEWORKS REGULATORY REGIME RESERVE RESERVE BANK RESULT RESULTS RETAIL ACTIVITIES RETAIL SALES RISK FACTOR RULE OF LAW SALARIED WORKERS SELF-EMPLOYMENT SERVICE PROVIDERS SEVERANCE PAYMENTS SMALL BUSINESS SMALL BUSINESS OWNER SMALL BUSINESS OWNERS SMALL BUSINESSES SMALL ENTERPRISE SMALL ENTERPRISES SMALL ENTREPRENEUR SMALL ENTREPRENEURS SOCIAL PROTECTION SOCIAL PROTECTIONS SOURCE OF INFORMATION SOURCES OF FINANCE START-UP START-UP CAPITAL SUPERVISION SUPPLIERS TAX BURDEN TAX CODES TAX RATE TAX REGIME TAX REGIMES TECHNICAL ASSISTANCE TERMS OF LOAN TURNOVER UNSKILLED LABOR URBAN AREAS VOUCHERS WAGE RATES WEAK ENFORCEMENT WORKER WORKERS
Online Access:	http://documents.worldbank.org/curated/en/2008/06/16373406/peru-trajectories-towards-formality http://hdl.handle.net/10986/12897

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Summary:	This report is the outcome of very close cooperation with the authorities of the Government of Peru. The authorities have been involved in all stages of the process, going back to the first phase of this programmatic study. The authorities proved instrumental in helping design the focus of this report, including the scope of a survey of businesses conducted for this study, the survey questionnaire itself, they also suggested specific topics to be explored, which are presented throughout the report mainly in the form of boxes. This report focuses on the trajectories towards formality of micro and small businesses, drawing insight by polling those businesses directly. The study finds no significant impact of certain characteristics of formality, such as having a municipal license or being registered with the tax authorities, on the profitability of businesses or on their probability of obtaining a loan. These results must be accompanied, however, by the caveat that establishing the impact of informality econometrically is notoriously difficult. The methodology used in this report does not attempt to capture the negative effects that informality may have on the performance of formal firms, or the effects that informality may have in undermining social trust and the overall business environment. The study also finds informality to be particularly persistent in the area of labor relations and access to pension, driven largely by high costs of being formal, limited enforcement of labor relations, and a preference for flexible labor relations. These two findings combined suggest that: (i) efforts to increase the access to health insurance and pension coverage of workers through a shift from informal arrangements to existing formal labor relations will prove difficult; and (ii) alternative methods to increase access to health and pension coverage are well-worth exploring. The rest of these main findings concentrate on the conclusions of the study regarding the determinants of informality and what prompts businesses to move towards formality.

Peru : Trajectories towards Formality

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