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

61 Pages Posted: 17 Jan 2017

See all articles by Najy Benhassine

Najy Benhassine

Massachusetts Institute of Technology (MIT) - Economics, Finance, Accounting (EFA)

David J. McKenzie

World Bank - Development Research Group (DECRG); IZA Institute of Labor Economics

Victor Pouliquen

World Bank

Massimiliano Santini

World Bank Group

Multiple version iconThere are 2 versions of this paper

Date Written: January 2017

Abstract

A randomized experiment based around the introduction of the entreprenant legal status in Benin is used 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 the full package of supplementary efforts boosts formalization by 16.3 percentage points. 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

Keywords: Informality, Regulatory Simplification, Small Enterprises

JEL Classification: D21, H25, L26, O12, O17

Suggested Citation

Benhassine, Najy and McKenzie, David John and Pouliquen, Victor and Santini, Massimiliano, Can Enhancing the Benefits of Formalization Induce Informal Firms to Become Formal? Experimental Evidence from Benin (January 2017). CEPR Discussion Paper No. DP11764, Available at SSRN: https://ssrn.com/abstract=2900181

Najy Benhassine (Contact Author)

Massachusetts Institute of Technology (MIT) - Economics, Finance, Accounting (EFA) ( email )

77 Massachusetts Avenue
Cambridge, MA 02139-4307
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David John McKenzie

World Bank - Development Research Group (DECRG) ( email )

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IZA Institute of Labor Economics ( email )

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Victor Pouliquen

World Bank

1818 H Street, NW
Washington, DC 20433
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Massimiliano Santini

World Bank Group ( email )

1818 H Street NW
Washington, DC 20433
United States

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