ClientResearch grant from IDB-MAP
Experimental impact evaluation of formalization programs.
Team in charge
Year2010 to 2013
We analyzed the impact of eliminating the initial fixed costs of registration on the decision of informal firms to operate formally in Bogotá, Colombia. The Chamber of Commerce of Bogotá (CCB) conducts workshops for prospective formal-sector entrants and arranges personalized meetings for them with CCB agents. The CCB’s decision to significantly reduce the transaction costs of registration and the entry into force of Act No. 1429 of 2010, which eliminated the costs of the initial procedure for registering as a formal enterprise and provided exemptions from relevant taxes during the first years after formalization, provided us with an ideal experiment for studying how the elimination of the initial fixed costs of formalization would influence firms’ decision to operate formally or not.
- Galiani S., C. Navajas and M. Melendez (2015). “On the effect of the costs of operating formally: New experimental evidence." NBER Working Paper No. 21292.