Does Inducing Informal Firms to Formalize Make Sense? : Experimental Evidence from Benin

Efforts to bring informal firms into the formal sector are often based on a view that this will bring benefits to the firms themselves, or at least benefit governments through increasing the tax base. A randomized experiment based around the introduction of the entreprenant legal status in Benin is...

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Main Authors:	Benhassine, Najy, McKenzie, David, Pouliquen, Victor, Santini, Massimiliano
Format:	Journal Article
Published:	Elsevier 2018
Subjects:	INFORMALITY SMALL ENTERPRISES REGULATORY SIMPLIFICATION SMALL AND MEDIUM ENTERPRISES TAX BASE TAXATION ADMINISTRATIVE COSTS
Online Access:	http://hdl.handle.net/10986/29135

id	okr-10986-29135
recordtype	oai_dc
spelling	okr-10986-291352021-05-25T10:54:42Z Does Inducing Informal Firms to Formalize Make Sense? : Experimental Evidence from Benin Benhassine, Najy McKenzie, David Pouliquen, Victor Santini, Massimiliano INFORMALITY SMALL ENTERPRISES REGULATORY SIMPLIFICATION SMALL AND MEDIUM ENTERPRISES TAX BASE TAXATION ADMINISTRATIVE COSTS Efforts to bring informal firms into the formal sector are often based on a view that this will bring benefits to the firms themselves, or at least benefit governments through increasing the tax base. A randomized experiment based around the introduction of the entreprenant legal status in Benin is used to test these assumptions, along with supplementary efforts to enhance the presumed benefits of formalizing to firms. Few firms register when just given information about the new regime, but our full package of supplementary efforts boosts formalization by 16.3 percentage points. However, this formalization does not bring firms higher sales or profits, and the cost of formalizing these firms exceeds the added taxation they will pay over the next decade. We show how better targeting of these policies towards firms that look more like formal firms to begin with can increase the formalization rate and improve cost-effectiveness. 2018-01-10T19:41:52Z 2018-01-10T19:41:52Z 2018-01 Journal Article Journal of Public Economics 0047-2727 http://hdl.handle.net/10986/29135 CC BY-NC-ND 3.0 IGO http://creativecommons.org/licenses/by-nc-nd/3.0/igo World Bank Elsevier Publications & Research :: Journal Article Publications & Research Africa Benin
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
topic	INFORMALITY SMALL ENTERPRISES REGULATORY SIMPLIFICATION SMALL AND MEDIUM ENTERPRISES TAX BASE TAXATION ADMINISTRATIVE COSTS
spellingShingle	INFORMALITY SMALL ENTERPRISES REGULATORY SIMPLIFICATION SMALL AND MEDIUM ENTERPRISES TAX BASE TAXATION ADMINISTRATIVE COSTS Benhassine, Najy McKenzie, David Pouliquen, Victor Santini, Massimiliano Does Inducing Informal Firms to Formalize Make Sense? : Experimental Evidence from Benin
geographic_facet	Africa Benin
description	Efforts to bring informal firms into the formal sector are often based on a view that this will bring benefits to the firms themselves, or at least benefit governments through increasing the tax base. A randomized experiment based around the introduction of the entreprenant legal status in Benin is used to test these assumptions, along with supplementary efforts to enhance the presumed benefits of formalizing to firms. Few firms register when just given information about the new regime, but our full package of supplementary efforts boosts formalization by 16.3 percentage points. However, this formalization does not bring firms higher sales or profits, and the cost of formalizing these firms exceeds the added taxation they will pay over the next decade. We show how better targeting of these policies towards firms that look more like formal firms to begin with can increase the formalization rate and improve cost-effectiveness.
format	Journal Article
author	Benhassine, Najy McKenzie, David Pouliquen, Victor Santini, Massimiliano
author_facet	Benhassine, Najy McKenzie, David Pouliquen, Victor Santini, Massimiliano
author_sort	Benhassine, Najy
title	Does Inducing Informal Firms to Formalize Make Sense? : Experimental Evidence from Benin
title_short	Does Inducing Informal Firms to Formalize Make Sense? : Experimental Evidence from Benin
title_full	Does Inducing Informal Firms to Formalize Make Sense? : Experimental Evidence from Benin
title_fullStr	Does Inducing Informal Firms to Formalize Make Sense? : Experimental Evidence from Benin
title_full_unstemmed	Does Inducing Informal Firms to Formalize Make Sense? : Experimental Evidence from Benin
title_sort	does inducing informal firms to formalize make sense? : experimental evidence from benin
publisher	Elsevier
publishDate	2018
url	http://hdl.handle.net/10986/29135
_version_	1764468582768443392

Does Inducing Informal Firms to Formalize Make Sense? : Experimental Evidence from Benin

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