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

Resource information

Date of publication: 
April 2013
Resource Language: 
ISBN / Resource ID: 
handle:10986/17927
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Copyright details: 
American Economic Association

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.

Authors and Publishers

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

de Mel, Suresh
McKenzie, David
Woodruff, Christopher

Publisher(s): 

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