Is Informality Good for Business? The Impacts of IDP Inflows on Formal Firms
This paper examines the effects of large inflows of internally displaced persons (IDP), who are primarily absorbed by the informal sector, on the behavior of formal manufacturing firms in Colombia. To identify causal effects, the analysis employs a...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2019
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/888741570457890807/Is-Informality-Good-for-Business-The-Impacts-of-IDP-Inflows-on-Formal-Firms http://hdl.handle.net/10986/32519 |
| Summary: | This paper examines the effects of large
inflows of internally displaced persons (IDP), who are
primarily absorbed by the informal sector, on the behavior
of formal manufacturing firms in Colombia. To identify
causal effects, the analysis employs annual, firm-level
panel data between 1995 and 2010 and exploits that when
conflict intensifies, forcefully displaced individuals tend
to migrate to municipalities where people from their origin
locations settled earlier. The paper finds that large
inflows of IDP induce sizable, negative effects on the
intensive and extensive margins of production of formal
firms. These effects are stronger for firms operating in
sectors that face a stronger competition from the informal economy. |
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