Shedding light on the shadows of informality: A meta-analysis of formalization interventions targeted at informal firms

Abstract

The Institute of Social Studies is Europe's longest-established centre of higher education and research in development studies. On 1 July 2009, it became a University Institute of the Erasmus University Rotterdam (EUR). Postgraduate teaching programmes range from six-week diploma courses to the PhD programme. Research at ISS is fundamental in the sense of laying a scientific basis for the formulation of appropriate development policies. The academic work of ISS is disseminated in the form of books, journal articles, teaching texts, monographs and working papers. The Working Paper series provides a forum for work in progress which seeks to elicit comments and generate discussion. The series includes academic research by staff, PhD participants and visiting fellows, and award-winning research papers by graduate students.

Do tax administrative interventions targeted at small businesses improve tax compliance and revenue collection? Evidence from Ugandan administrative tax data

“…Second, our paper adds to the literature on formalization interventions in developing countries, which includes studies in Latin America and South-East Asia reviewed by Bruhn and McKenzie (2014) and Floridi et al (2020), and novel research in Africa by Lediga et al (2020) and Benhassine et al (2018). In particular, we extend the knowledge about how formalization interventions can impact on not only firm registration but also tax-filing compliance, and whether this can be achieved cost-effectively.…”

“…Traditional methods, such as tax education campaigns or taxpayer register programmes, are used to enhance taxpaying in developing countries. Several studies have evaluated the impacts of formalization interventions such as business registration programmes and information campaigns on firms' formalization rate, and have found that in general such interventions do not increase the number of formal firms (for literature reviews see e.g., Bruhn and McKenzie 2014;Floridi et al 2020). Most previous studies have examined formalization interventions in Latin America and South-East Asia, and only a few have been conducted in Africa.…”

The bright side of formalization policies! Meta-analysis of the benefits of policy-induced versus self-induced formalization

“…Despite such efforts, policies fostering business formalization do not seem to achieve the expected transformation (Floridi, Demena, and Wagner 2020). If formalization policies have limited impacts, it is not clear whether those firms opting for formalizing actually gain advantages from switching status.…”

“…Whilst meta-analyses have been carried out in several areas of economics and business management (Tingvall and Ljungwall 2012;Demena 2015), few reviews and meta-analyses explore the impact of policy actions on business formalization (Floridi, Demena, and Wagner 2020). To the best of our knowledge, there are no meta-analyses investigating firm performance induced by formalization.…”

Co-Financing Community-Driven Development Through Informal Taxation: Experimental Evidence from South-Central Somalia

“…In contrast to its common usage, 'formalisation' does not describe a distinct phenomenon, but a set of diverse processes relating to the creation of new institutional linkages between state or formal economic structures and individuals or businesses. 4 As we will show, however, the term is conventionally used to describe and compare, as if they were 1 For reviews and meta-analyses of this expansive literature, see for example Bruhn and McKenzie (2014); Floridi, Demena and Wagner (2020). Where it is motivated in part by a desire to widen the tax base, policy enthusiasm seems likely to increase to address fiscal shortfalls resulting from the Covid-19 pandemic (Gallien and van den Boogaard 2021 forthcoming).…”