Casting a Shadow : Productivity of Formal Firms and Informality

Using firm-level survey data for a large cross section of countries, the paper assesses the gap in labor productivity between formal and informal firms in developing countries for which comparable data are available. It also investigates the impact...

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Main Authors: Amin, Mohammad, Ohnsorge, Franziska L., Okou, Cedric
Format: Working Paper
Language:English
Published: World Bank, Washington, DC 2019
Subjects:
Online Access:http://documents.worldbank.org/curated/en/116331563818341148/Casting-a-Shadow-Productivity-of-Formal-Firms-and-Informality
http://hdl.handle.net/10986/32129
id okr-10986-32129
recordtype oai_dc
spelling okr-10986-321292022-09-20T00:14:30Z Casting a Shadow : Productivity of Formal Firms and Informality Amin, Mohammad Ohnsorge, Franziska L. Okou, Cedric FIRM PRODUCTIVITY INFORMALITY COMPETITIVENESS LABOR PRODUCTIVITY Using firm-level survey data for a large cross section of countries, the paper assesses the gap in labor productivity between formal and informal firms in developing countries for which comparable data are available. It also investigates the impact of competition from informal firms on the labor productivity of formal firms. The results show that on average, the labor productivity of informal firms is about one-fourth that of formal firms. Moreover, the labor productivity of formal firms that face competition from informal firms is about 75 percent of the average labor productivity of formal firms that do not experience informal competition. This suggests that competition from the informal sector can erode formal firms' market share and the resources available to boost productivity where formal firms shoulder the additional cost of regulatory compliance. These findings are robust to a range of firm and country characteristics as well as checks for endogeneity concerns. 2019-07-29T18:43:17Z 2019-07-29T18:43:17Z 2019-07 Working Paper http://documents.worldbank.org/curated/en/116331563818341148/Casting-a-Shadow-Productivity-of-Formal-Firms-and-Informality http://hdl.handle.net/10986/32129 English Policy Research Working Paper;No. 8945 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper
repository_type Digital Repository
institution_category Foreign Institution
institution Digital Repositories
building World Bank Open Knowledge Repository
collection World Bank
language English
topic FIRM PRODUCTIVITY
INFORMALITY
COMPETITIVENESS
LABOR PRODUCTIVITY
spellingShingle FIRM PRODUCTIVITY
INFORMALITY
COMPETITIVENESS
LABOR PRODUCTIVITY
Amin, Mohammad
Ohnsorge, Franziska L.
Okou, Cedric
Casting a Shadow : Productivity of Formal Firms and Informality
relation Policy Research Working Paper;No. 8945
description Using firm-level survey data for a large cross section of countries, the paper assesses the gap in labor productivity between formal and informal firms in developing countries for which comparable data are available. It also investigates the impact of competition from informal firms on the labor productivity of formal firms. The results show that on average, the labor productivity of informal firms is about one-fourth that of formal firms. Moreover, the labor productivity of formal firms that face competition from informal firms is about 75 percent of the average labor productivity of formal firms that do not experience informal competition. This suggests that competition from the informal sector can erode formal firms' market share and the resources available to boost productivity where formal firms shoulder the additional cost of regulatory compliance. These findings are robust to a range of firm and country characteristics as well as checks for endogeneity concerns.
format Working Paper
author Amin, Mohammad
Ohnsorge, Franziska L.
Okou, Cedric
author_facet Amin, Mohammad
Ohnsorge, Franziska L.
Okou, Cedric
author_sort Amin, Mohammad
title Casting a Shadow : Productivity of Formal Firms and Informality
title_short Casting a Shadow : Productivity of Formal Firms and Informality
title_full Casting a Shadow : Productivity of Formal Firms and Informality
title_fullStr Casting a Shadow : Productivity of Formal Firms and Informality
title_full_unstemmed Casting a Shadow : Productivity of Formal Firms and Informality
title_sort casting a shadow : productivity of formal firms and informality
publisher World Bank, Washington, DC
publishDate 2019
url http://documents.worldbank.org/curated/en/116331563818341148/Casting-a-Shadow-Productivity-of-Formal-Firms-and-Informality
http://hdl.handle.net/10986/32129
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