Does formality improve micro-firm performance? Evidence from the Brazilian SIMPLES program

• 成果类型: Article
• 署名作者: Fajnzylber, Pablo; Maloney, William F.; Montes-Rojas, Gabriel V.
• 署名单位: City St Georges, University of London; The World Bank
• 刊物名称: JOURNAL OF DEVELOPMENT ECONOMICS
• ISSN/ISSBN: 0304-3878
• DOI: 10.1016/j.jdeveco.2010.01.009
• 发表日期: 2011
• 页码: 262-276
• 关键词: Micro-firms; self-employment; informality

摘要

This paper exploits an extensive Brazilian micro-enterprise survey and the 1996 introduction of a business tax reduction and simplification scheme (SIMPLES) to examine three questions. First, do high tax rates and complex tax regulations really constitute a barrier to the formalization of micro-firms? Second, does formalization improve firm performance measured along several dimensions, including revenues, employment and capital stock? Third, what are the channels through which this occurs? We find that SIMPLES led to a significant increase in formality in several dimensions. Moreover, newly created firms that opt for operating formally show higher levels of revenue and profits, employ more workers and are more capital intensive (only for those firms that have employees). The channel through which this occurs is not access to credit or contracts with larger firms. Rather, it appears that the lower cost of contracting labor leads to adopting production techniques that involve a permanent location and a larger paid labor force. (C) 2010 Elsevier B.V. All rights reserved.