Pathways to Formalization : Going Beyond the Formality Dichotomy -- The Case of Peru

Dí ; az, Juan José ; Chacaltana, Juan ; Rigolini, Jamele ; Ruiz, Claudia

World Bank, Washington, DC

关键词: INFORMALITY;    BUSINESS FORMALIZATION;    BUSINESS ENVIRONMENT;    REGULATION;    LABOR FORMALIZATION;   

DOI  :  10.1596/1813-9450-8551
RP-ID  :  WPS8551

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

Too often, academics and policy makersinterpret formality as a binary choice and formalization asan irreversible process. Yet, formalization has many facetsand shades on the business and labor fronts, and firms maynot be able or willing to formalize all at once. This paperexplores the joint process of business and laborformalization, using a unique panel data set of Peruvianmicro enterprises. The paper finds that business formalitydoes not imply labor formality, and vice versa. Further,there is significant churning in and out of differentdimensions of formality within a relatively short period.Using an instrumental variable approach, the paper infersthat business formalization affects labor formalization butnot the other way around, and that enforcement is a keydriver of formalization. Overall, the analysis shows thatformalization is a gradual and reversible process, withsmall entrepreneurs weighing their possibilities in eachpathway to business (often) or labor (less often)formalization, but rarely both at the same time.