ERF 26th Annual Conference
Household Enterprises: The Impact of Informality on Productivity and Profitability
No.
ERF26_97
Publisher
ERF
Date
July, 2020
Topic
L2. Firm Objectives, Organization, and Behavior
D2. Production and Organizations
O1. Economic Development
This paper assesses the impact of commercial registration on the labor productivity and profitability of household enterprises. Based on the 2012 and 2018 rounds of the Egyptian Labor Market Panel Surveys, We use the distance to the local tax office as an instrument for firms' selection into formality. We find a positive effect of formal registration on labor productivity, together with a negative effect on profitability. Our findings also highlight formality heterogeneous effects. The effect of formality on firms' performance differs across firms with different characteristics and depends on the timing of transition to formal status. Formality is more beneficial for micro-sized firms owned by less-educated and female entrepreneurs who do not have a work social insurance.
Research Associates
Nesma Ali
Economist, Enterprise Analysis Unit, The World Bank...
Research Fellows
Mohamed Ali Marouani
Associate Professor, Université Paris1-Panthéon-Sorbonne