Pathways to Formalization : Going Beyond the Formality Dichotomy -- The Case of Peru

Pathways to Formalization : Going Beyond the Formality Dichotomy -- The Case of Peru

Too often, academics and policy makers interpret formality as a binary choice and formalization as an irreversible process. Yet, formalization has many facets and shades on the business and labor fronts, and firms may not be able or willing to form...

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Main Authors: Díaz, Juan José, Chacaltana, Juan, Rigolini, Jamele, Ruiz, Claudia
Format: Working Paper
Language:English
Published: World Bank, Washington, DC 2018
Subjects:
INFORMALITY
BUSINESS FORMALIZATION
BUSINESS ENVIRONMENT
REGULATION
LABOR FORMALIZATION
SMALL AND MEDIUM ENTERPRISES
LABOR MARKET
MICROENTERPRISE
Online Access:http://documents.worldbank.org/curated/en/528901534251354144/Pathways-to-formalization-going-beyond-the-formality-dichotomy-the-case-of-Peru
http://hdl.handle.net/10986/30241
id okr-10986-30241
recordtype oai_dc
spelling okr-10986-302412021-06-08T14:42:47Z Pathways to Formalization : Going Beyond the Formality Dichotomy -- The Case of Peru Díaz, Juan José Chacaltana, Juan Rigolini, Jamele Ruiz, Claudia INFORMALITY BUSINESS FORMALIZATION BUSINESS ENVIRONMENT REGULATION LABOR FORMALIZATION SMALL AND MEDIUM ENTERPRISES LABOR MARKET MICROENTERPRISE Too often, academics and policy makers interpret formality as a binary choice and formalization as an irreversible process. Yet, formalization has many facets and shades on the business and labor fronts, and firms may not be able or willing to formalize all at once. This paper explores the joint process of business and labor formalization, using a unique panel data set of Peruvian micro enterprises. The paper finds that business formality does not imply labor formality, and vice versa. Further, there is significant churning in and out of different dimensions of formality within a relatively short period. Using an instrumental variable approach, the paper infers that business formalization affects labor formalization but not the other way around, and that enforcement is a key driver of formalization. Overall, the analysis shows that formalization is a gradual and reversible process, with small entrepreneurs weighing their possibilities in each pathway to business (often) or labor (less often) formalization, but rarely both at the same time. 2018-08-15T20:11:18Z 2018-08-15T20:11:18Z 2018-08 Working Paper http://documents.worldbank.org/curated/en/528901534251354144/Pathways-to-formalization-going-beyond-the-formality-dichotomy-the-case-of-Peru http://hdl.handle.net/10986/30241 English Policy Research Working Paper;No. 8551 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 Latin America & Caribbean Peru
repository_type Digital Repository
institution_category Foreign Institution
institution Digital Repositories
building World Bank Open Knowledge Repository
collection World Bank
language English
topic INFORMALITY
BUSINESS FORMALIZATION
BUSINESS ENVIRONMENT
REGULATION
LABOR FORMALIZATION
SMALL AND MEDIUM ENTERPRISES
LABOR MARKET
MICROENTERPRISE
spellingShingle INFORMALITY
BUSINESS FORMALIZATION
BUSINESS ENVIRONMENT
REGULATION
LABOR FORMALIZATION
SMALL AND MEDIUM ENTERPRISES
LABOR MARKET
MICROENTERPRISE
Díaz, Juan José
Chacaltana, Juan
Rigolini, Jamele
Ruiz, Claudia
Pathways to Formalization : Going Beyond the Formality Dichotomy -- The Case of Peru
geographic_facet Latin America & Caribbean
Peru
relation Policy Research Working Paper;No. 8551
description Too often, academics and policy makers interpret formality as a binary choice and formalization as an irreversible process. Yet, formalization has many facets and shades on the business and labor fronts, and firms may not be able or willing to formalize all at once. This paper explores the joint process of business and labor formalization, using a unique panel data set of Peruvian micro enterprises. The paper finds that business formality does not imply labor formality, and vice versa. Further, there is significant churning in and out of different dimensions of formality within a relatively short period. Using an instrumental variable approach, the paper infers that business formalization affects labor formalization but not the other way around, and that enforcement is a key driver of formalization. Overall, the analysis shows that formalization is a gradual and reversible process, with small entrepreneurs weighing their possibilities in each pathway to business (often) or labor (less often) formalization, but rarely both at the same time.
format Working Paper
author Díaz, Juan José
Chacaltana, Juan
Rigolini, Jamele
Ruiz, Claudia
author_facet Díaz, Juan José
Chacaltana, Juan
Rigolini, Jamele
Ruiz, Claudia
author_sort Díaz, Juan José
title Pathways to Formalization : Going Beyond the Formality Dichotomy -- The Case of Peru
title_short Pathways to Formalization : Going Beyond the Formality Dichotomy -- The Case of Peru
title_full Pathways to Formalization : Going Beyond the Formality Dichotomy -- The Case of Peru
title_fullStr Pathways to Formalization : Going Beyond the Formality Dichotomy -- The Case of Peru
title_full_unstemmed Pathways to Formalization : Going Beyond the Formality Dichotomy -- The Case of Peru
title_sort pathways to formalization : going beyond the formality dichotomy -- the case of peru
publisher World Bank, Washington, DC
publishDate 2018
url http://documents.worldbank.org/curated/en/528901534251354144/Pathways-to-formalization-going-beyond-the-formality-dichotomy-the-case-of-Peru
http://hdl.handle.net/10986/30241
_version_ 1764471505513611264

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