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:	FIRM PRODUCTIVITY INFORMALITY COMPETITIVENESS LABOR PRODUCTIVITY
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
_version_	1764475877367742464

Casting a Shadow : Productivity of Formal Firms and Informality

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