What Determines Firms' Decisions to Formalize? Empirical Evidence from Rural Indonesia

Konferenzbeitrag

In this paper we analyze the decision of small and micro firms to formalize, i.e. to obtain business and other licenses in rural Indonesia. We use the rural investment climate survey (RICS) that comprises around 2500 non-farm rural enterprises in six Indonesian districts and analyze in an IV approach the effect of formalization on tax payments, corruption, access to credit and revenue. We take firm heterogeneity into account and show how the effect of formalization depends on firm characteristics such as firm size, education and ethnicity of the owner. We identify firm and owner characteristics that make formalization more likely.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Proceedings of the German Development Economics Conference, Frankfurt a.M. 2009 ; No. 32

Classification and Topics

• Classification: Wirtschaft ; Formal and Informal Sectors; Shadow Economy; Institutional Arrangements ; Economic Development: Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
• Subject: Formalization ; rural development ; rural investment climate

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): McCulloch, Neil ; Schulze, Günther G. ; Voss, Janina
• Event: Veröffentlichung
• (who): Verein für Socialpolitik, Ausschuss für Entwicklungsländer
• (where): Göttingen
• (when): 2009

Further information

• Handle: http://hdl.handle.net/10419/39920
• Last update: 10.03.2025, 11:42 AM CET