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

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

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

Resource information

Date of publication
Abril 2013
Resource Language
ISBN / Resource ID
handle:10986/17927
License of the resource

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.

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Authors and Publishers

Author(s), editor(s), contributor(s)

de Mel, Suresh
McKenzie, David
Woodruff, Christopher

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Geographical focus