Formalization of Female Micro-Entrepreneurs in Brazil

Abstract

This paper uses rich individual-level data to understand how a nationwide formalization program (the MEI program) impacts men and women differently. The MEI program began in 2009 to reduce formalization costs for micro-entrepreneurs. The identification strategy exploits the staggered rollout of MEI implementation across states and the exogeneity of the eligible industries to identify the impacts on the formalization of micro-enterprises. Our findings show that women entrepreneurs drove the formalization of pre-existing micro-businesses and that the access to social protection by the program might be one of the reasons women formalize more. We find no evidence that the MEI program is a way out of unemployment or inactivity for women or that employers changed their employees’ contracts due to the program.

Keywords: Labor markets, formalization, tax reforms, gender.