A Helping Hand or the Long Arm of the Law? : Experimental Evidence on What Governments Can Do to Formalize Firms

A Helping Hand or the Long Arm of the Law? : Experimental Evidence on What Governments Can Do to Formalize Firms

We conducted a field experiment in Belo Horizonte, Brazil to test which government actions work to encourage informal firms to register. We find zero or negative impacts of information and free cost treatments and a significant but small increase in formalization from inspections. The local averag...

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Main Authors: de Adrade, Gustavo Henrique, Bruhn, Miriam, McKenzie, David
Format: Journal Article
Language:en_US
Published: Published by Oxford University Press on behalf of the World Bank 2017
Subjects:
FORMALIZATION
INFORMALITY
BUSINESS REGISTRATION
BUSINESS ENVIRONMENT
SMALL FIRMS
TAX COMPLIANCE
MICROENTERPRISE
TAXATION
Online Access:http://hdl.handle.net/10986/27691
id okr-10986-27691
recordtype oai_dc
spelling okr-10986-276912021-05-25T10:54:42Z A Helping Hand or the Long Arm of the Law? : Experimental Evidence on What Governments Can Do to Formalize Firms de Adrade, Gustavo Henrique Bruhn, Miriam McKenzie, David FORMALIZATION INFORMALITY BUSINESS REGISTRATION BUSINESS ENVIRONMENT SMALL FIRMS TAX COMPLIANCE MICROENTERPRISE TAXATION We conducted a field experiment in Belo Horizonte, Brazil to test which government actions work to encourage informal firms to register. We find zero or negative impacts of information and free cost treatments and a significant but small increase in formalization from inspections. The local average treatment effect estimates of the inspection impact are larger, providing a 21 to 27 percentage point increase in the likelihood of formalizing. The results show that most informal firms will not formalize unless forced to do so, suggesting that formality offers little private benefit to these firms. 2017-08-09T20:28:21Z 2017-08-09T20:28:21Z 2016-01 Journal Article World Bank Economic Review 1564-698X http://hdl.handle.net/10986/27691 en_US CC BY-NC-ND 3.0 IGO http://creativecommons.org/licenses/by-nc-nd/3.0/igo World Bank Published by Oxford University Press on behalf of the World Bank Publications & Research :: Journal Article Publications & Research Latin America & Caribbean Brazil
repository_type Digital Repository
institution_category Foreign Institution
institution Digital Repositories
building World Bank Open Knowledge Repository
collection World Bank
language en_US
topic FORMALIZATION
INFORMALITY
BUSINESS REGISTRATION
BUSINESS ENVIRONMENT
SMALL FIRMS
TAX COMPLIANCE
MICROENTERPRISE
TAXATION
spellingShingle FORMALIZATION
INFORMALITY
BUSINESS REGISTRATION
BUSINESS ENVIRONMENT
SMALL FIRMS
TAX COMPLIANCE
MICROENTERPRISE
TAXATION
de Adrade, Gustavo Henrique
Bruhn, Miriam
McKenzie, David
A Helping Hand or the Long Arm of the Law? : Experimental Evidence on What Governments Can Do to Formalize Firms
geographic_facet Latin America & Caribbean
Brazil
description We conducted a field experiment in Belo Horizonte, Brazil to test which government actions work to encourage informal firms to register. We find zero or negative impacts of information and free cost treatments and a significant but small increase in formalization from inspections. The local average treatment effect estimates of the inspection impact are larger, providing a 21 to 27 percentage point increase in the likelihood of formalizing. The results show that most informal firms will not formalize unless forced to do so, suggesting that formality offers little private benefit to these firms.
format Journal Article
author de Adrade, Gustavo Henrique
Bruhn, Miriam
McKenzie, David
author_facet de Adrade, Gustavo Henrique
Bruhn, Miriam
McKenzie, David
author_sort de Adrade, Gustavo Henrique
title A Helping Hand or the Long Arm of the Law? : Experimental Evidence on What Governments Can Do to Formalize Firms
title_short A Helping Hand or the Long Arm of the Law? : Experimental Evidence on What Governments Can Do to Formalize Firms
title_full A Helping Hand or the Long Arm of the Law? : Experimental Evidence on What Governments Can Do to Formalize Firms
title_fullStr A Helping Hand or the Long Arm of the Law? : Experimental Evidence on What Governments Can Do to Formalize Firms
title_full_unstemmed A Helping Hand or the Long Arm of the Law? : Experimental Evidence on What Governments Can Do to Formalize Firms
title_sort helping hand or the long arm of the law? : experimental evidence on what governments can do to formalize firms
publisher Published by Oxford University Press on behalf of the World Bank
publishDate 2017
url http://hdl.handle.net/10986/27691
_version_ 1764465906702876672

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