Publication: A Helping Hand or the Long Arm of the Law?: Experimental Evidence on What Governments Can Do to Formalize Firms
Date
2016-01
ISSN
1564-698X
Published
2016-01
Author(s)
Abstract
We conducted a field experiment in Belo Horizonte, Brazil to test which government
actions work to encourage informal firms to register. We find zero or negative impacts
of information and free cost treatments and a significant but small increase in formalization from inspections. The local average treatment effect estimates of the inspection impact are larger, providing a 21 to 27 percentage point increase in the likelihood of formalizing. The results show that most informal firms will not formalize unless forced to do so, suggesting that formality offers little private benefit to these firms.
Citation
“de Adrade, Gustavo Henrique; Bruhn, Miriam; McKenzie, David. 2016. A Helping Hand or the Long Arm of the Law? : Experimental Evidence on What Governments Can Do to Formalize Firms. World Bank Economic Review. © Published by Oxford University Press on behalf of the World Bank. http://openknowledge.worldbank.org/handle/10986/27691 License: CC BY-NC-ND 3.0 IGO.”
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World Bank Economic Review
1564-698X
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