Revisiting the Impact of the Brazilian Simples Program on Firms'Formalization Rates

23 Pages Posted: 20 Apr 2016

Date Written: March 16, 2016

Abstract

A recent survey of rigorous impact evaluations of programs to help small and medium-size firms to formalize indicates that the programs do not seem to work for most informal firms. One of the few exceptions finds large effects of a tax simplification program in Brazil called SIMPLES on firms' formalization rates and performance indicators. Using the same data set but a different identification strategy, another study concludes that the program had limited effect on formalization rates. The aim of this paper is twofold. First, it revisits the two studies to reconcile their conflicting conclusions. Second, it investigates the validity of the identification strategy of both studies. The findings suggest that the conflicting results between the two studies are caused by the dates each used to identify when the program was put into effect. A robustness check indicates that data heaping and seasonality around November cast doubts on the identification strategy used in both studies to estimate the effect of this particular program.

Keywords: E-Business, Science Education, Microfinance, Small Scale Enterprises, Scientific Research & Science Parks

Suggested Citation

Piza, Caio, Revisiting the Impact of the Brazilian Simples Program on Firms'Formalization Rates (March 16, 2016). World Bank Policy Research Working Paper No. 7605, Available at SSRN: https://ssrn.com/abstract=2748868

Caio Piza (Contact Author)

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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