Publication:
Can Enhancing the Benefits of Formalization Induce Informal Firms to Become Formal? Experimental Evidence from Benin

Simple item page
dc.contributor.authorBenhassine, Najy
dc.contributor.authorMcKenzie, David
dc.contributor.authorPouliquen, Victor
dc.contributor.authorSantini, Massimiliano
dc.date.accessioned2016-12-12T17:48:07Z
dc.date.available2016-12-12T17:48:07Z
dc.date.issued2016-11
dc.description.abstractGovernments around the world have introduced reforms to attempt to make it easier for informal firms to formalize. However, most informal firms have not gone on to become formal, especially when tax registration is involved. A randomized experiment based around the introduction of the entreprenant legal status in Benin is used to provide evidence from an African context on the willingness of informal firms to register after introducing a simple, free registration process, and to test the effectiveness of supplementary efforts to enhance the presumed benefits of formalization by facilitating its links to government training programs, support to open bank accounts, and tax mediation services. Few firms register when just given information about the new regime, but 9.6 percentage points more register when they were visited in person and the benefits were explained. The full package of supplementary efforts boosts the impact on the formalization rate to 16.3 percentage points, demonstrating that enhancing the benefits of formalization does induce more firms to formalize. Firms that are larger, and that look more like formal firms to begin with, are more likely to formalize, providing guidance for better targeting of such policies. However, formalization appears to offer limited benefits to the firms, and the costs of personalized assistance are high, suggesting that such enhanced formalization efforts are unlikely to pass cost-benefit tests.en
dc.identifierhttp://documents.worldbank.org/curated/en/579081480451260134/Can-enhancing-the-benefits-of-formalization-induce-informal-firms-to-become-formal-experimental-evidence-from-Benin
dc.identifier.doi10.1596/1813-9450-7900
dc.identifier.urihttps://hdl.handle.net/10986/25704
dc.languageEnglish
dc.language.isoen_US
dc.publisherWorld Bank, Washington, DC
dc.relation.ispartofseriesPolicy Research Working Paper;No. 7900
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo/
dc.subjectinformality
dc.subjectsmall and medium-sized enterprises
dc.subjectsmall enterprises
dc.subjectregulatory simplification
dc.subjectregulatory reform
dc.titleCan Enhancing the Benefits of Formalization Induce Informal Firms to Become Formal? Experimental Evidence from Beninen
dc.typeWorking Paperen
dc.typeDocument de travailfr
dc.typeDocumento de trabajoes
dspace.entity.typePublication
okr.associatedcontenthttps://openknowledge.worldbank.org/handle/10986/29135 Accepted journal manuscript
okr.crossref.titleCan Enhancing the Benefits of Formalization Induce Informal Firms to Become Formal? Experimental Evidence from Benin
okr.date.disclosure2016-11-29
okr.doctypePublications & Research
okr.doctypePublications & Research::Policy Research Working Paper
okr.docurlhttp://documents.worldbank.org/curated/en/579081480451260134/Can-enhancing-the-benefits-of-formalization-induce-informal-firms-to-become-formal-experimental-evidence-from-Benin
okr.guid579081480451260134
okr.identifier.doi10.1596/1813-9450-7900
okr.identifier.externaldocumentum090224b084755999_1_0
okr.identifier.internaldocumentum26982075
okr.identifier.reportWPS7900
okr.importedtrue
okr.language.supporteden
okr.pdfurlhttp://documents.worldbank.org/curated/en/579081480451260134/pdf/WPS7900.pdfen
okr.region.administrativeAfrica
okr.region.countryBenin
okr.statistics.combined2502
okr.statistics.dr579081480451260134
okr.statistics.drstats1747
okr.topicPrivate Sector Development::Small and Medium Size Enterprises
okr.topicLaw and Development::Administrative & Regulatory Law
okr.topicLaw and Development::Private Sector Development Law
okr.topicPrivate Sector Development::Legal Regulation and Business Environment
okr.unitFinance and Private Sector Development Team, Development Research Group and the Trade and Competitiveness Global Practice Group
relation.isAuthorOfPublication148d6d6d-76e5-5d6f-9af9-98313e30551f
relation.isAuthorOfPublication.latestForDiscovery148d6d6d-76e5-5d6f-9af9-98313e30551f
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
Files
Original bundle
Now showing 1 - 1 of 1
Thumbnail Image
Name:
WPS7900.pdf
Size:
1.13 MB
Format:
Adobe Portable Document Format
Download
License bundle
Now showing 1 - 1 of 1
No Thumbnail Available
Name:
license.txt
Size:
1.71 KB
Format:
Plain Text
Description:
Download
Collections
Policy Research Working Papers