The Demand for, and Consequences of, Formalization among Informal Firms in Sri Lanka

A field experiment in Sri Lanka provides informal firms incentives to formalize. Information about the registration process and reimbursement of direct costs does not increase registration. Payments equivalent to one-half to one month (alternatively, two months) of the median firm's profits lea...

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Bibliographic Details
Main Authors:	de Mel, Suresh, McKenzie, David, Woodruff, Christopher
Format:	Journal Article
Language:	en_US
Published:	American Economic Association 2014
Subjects:	firm behavior firm performance entrepreneurship industrialization manufacturing service industries technology Microdata Set
Online Access:	http://hdl.handle.net/10986/17927

id	okr-10986-17927
recordtype	oai_dc
spelling	okr-10986-179272021-04-23T14:03:41Z The Demand for, and Consequences of, Formalization among Informal Firms in Sri Lanka de Mel, Suresh McKenzie, David Woodruff, Christopher firm behavior firm performance entrepreneurship industrialization manufacturing service industries technology Microdata Set A field experiment in Sri Lanka provides informal firms incentives to formalize. Information about the registration process and reimbursement of direct costs does not increase registration. Payments equivalent to one-half to one month (alternatively, two months) of the median firm's profits leads to registration of around one-fifth (alternatively, one-half ) of firms. Land ownership issues are the most common reason for not registering. Follow-up surveys 15 to 31 months later show higher mean profits, but largely in a few firms that grew rapidly. We find little evidence for other changes in behavior, but formalized firms express more trust in the state. 2014-04-21T19:19:34Z 2014-04-21T19:19:34Z 2013-04 Journal Article American Economic Journal: Applied Economics 1945-7782 10.1257/app.5.2.122 http://hdl.handle.net/10986/17927 en_US CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo American Economic Association American Economic Association Publications & Research :: Journal Article Sri Lanka
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	en_US
topic	firm behavior firm performance entrepreneurship industrialization manufacturing service industries technology Microdata Set
spellingShingle	firm behavior firm performance entrepreneurship industrialization manufacturing service industries technology Microdata Set de Mel, Suresh McKenzie, David Woodruff, Christopher The Demand for, and Consequences of, Formalization among Informal Firms in Sri Lanka
geographic_facet	Sri Lanka
description	A field experiment in Sri Lanka provides informal firms incentives to formalize. Information about the registration process and reimbursement of direct costs does not increase registration. Payments equivalent to one-half to one month (alternatively, two months) of the median firm's profits leads to registration of around one-fifth (alternatively, one-half ) of firms. Land ownership issues are the most common reason for not registering. Follow-up surveys 15 to 31 months later show higher mean profits, but largely in a few firms that grew rapidly. We find little evidence for other changes in behavior, but formalized firms express more trust in the state.
format	Journal Article
author	de Mel, Suresh McKenzie, David Woodruff, Christopher
author_facet	de Mel, Suresh McKenzie, David Woodruff, Christopher
author_sort	de Mel, Suresh
title	The Demand for, and Consequences of, Formalization among Informal Firms in Sri Lanka
title_short	The Demand for, and Consequences of, Formalization among Informal Firms in Sri Lanka
title_full	The Demand for, and Consequences of, Formalization among Informal Firms in Sri Lanka
title_fullStr	The Demand for, and Consequences of, Formalization among Informal Firms in Sri Lanka
title_full_unstemmed	The Demand for, and Consequences of, Formalization among Informal Firms in Sri Lanka
title_sort	demand for, and consequences of, formalization among informal firms in sri lanka
publisher	American Economic Association
publishDate	2014
url	http://hdl.handle.net/10986/17927
_version_	1764438715478835200

The Demand for, and Consequences of, Formalization among Informal Firms in Sri Lanka

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