Social capital as a substitute for formality: Evidence from Bolivia
AbstractThe paper studies the role of social capital in the urban informal sector in Bolivia. It shows that a formal firm has about 6.4 times the sales of an informal firm with no social capital, but informal firms use their social capital to compensate for the lack of formal productivity benefits. By being formal, firms obtain permanent visibility because they can operate a shop or a visible production location and they can produce in locations with better public infrastructure. Informal firms, in contrast, sell in one place – typically in street markets in front of formal shops – and produce in another — typically in the outskirts. Social capital increases accessibility of informal firms and provides them with security benefits at their production location.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Elsevier in its journal European Journal of Political Economy.
Volume (Year): 31 (2013)
Issue (Month): C ()
Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/505544
Social capital; Formal and informal institutions; Informal sector; Small firms; Bolivia;
Find related papers by JEL classification:
- O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
- D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
- H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Simon Johnson & John McMillan, 2002.
"Courts and Relational Contracts,"
Journal of Law, Economics and Organization,
Oxford University Press, vol. 18(1), pages 221-277, April.
- Kurt Annen, 2001. "Inclusive and Exclusive Social Capital in the Small-Firm Sector in Developing Countries," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 157(2), pages 319-, June.
- Anke Kessler & Christoph Lülfesmann, 2004. "Bilateral bargaining, unverifiable quality, and options to return," Economic Theory, Springer, vol. 23(2), pages 395-410, January.
- Axel Dreher & Christos Kotsogiannis & Steve McCorriston, 2009.
"How do institutions affect corruption and the shadow economy?,"
International Tax and Public Finance,
Springer, vol. 16(6), pages 773-796, December.
- Axel Dreher & Christos Kotsogiannis & Steve McCorriston, 2005. "How do Institutions Affect Corruption and the Shadow Economy?," Public Economics 0502012, EconWPA, revised 24 Feb 2005.
- Axel Dreher & Christos Kotsogiannis & Steve McCorriston, 2005. "How Do Institutions Affect Corruption and the Shadow Economy," Discussion Papers 0505, Exeter University, Department of Economics.
- Besley, Timothy J. & Persson, Torsten, 2007.
"The Origins of State Capacity: Property Rights, Taxation, and Politics,"
CEPR Discussion Papers
6370, C.E.P.R. Discussion Papers.
- Timothy Besley & Torsten Persson, 2009. "The Origins of State Capacity: Property Rights, Taxation, and Politics," American Economic Review, American Economic Association, vol. 99(4), pages 1218-44, September.
- Timothy Besley & Torsten Persson, 2007. "The Origins of State Capacity: Property Rights, Taxation, and Politics," NBER Working Papers 13028, National Bureau of Economic Research, Inc.
- Timothy Besley & Torsten Persson, 2009. "The origins of state capacity: property rights, taxation and politics," LSE Research Online Documents on Economics 33768, London School of Economics and Political Science, LSE Library.
- McKenzie, David & Sakho, Yaye Seynabou, 2007.
"Does it pay firms to register for taxes ? the impact of formality on firm profitability,"
Policy Research Working Paper Series
4449, The World Bank.
- McKenzie, David & Seynabou Sakho, Yaye, 2010. "Does it pay firms to register for taxes? The impact of formality on firm profitability," Journal of Development Economics, Elsevier, vol. 91(1), pages 15-24, January.
- McKenzie, David & Sakho, Yaye Seynabou, 2007. "Does It Pay Firms to Register for Taxes? The Impact of Formality on Firm Profitability," IZA Discussion Papers 3179, Institute for the Study of Labor (IZA).
- Woodruff, Christopher, 1998. "Contract enforcement and trade liberalization in Mexico's footwear industry," World Development, Elsevier, vol. 26(6), pages 979-991, June.
- Marcel Fafchamps, 2005.
"Development and Social Capital,"
Economics Series Working Papers
GPRG-WPS-007, University of Oxford, Department of Economics.
- Grigor Sukiassyan & Jeffrey Nugent, 2008. "Associations versus registration as alternative strategies of small firms," Small Business Economics, Springer, vol. 31(2), pages 147-161, August.
- Beckmann, Volker & Boger, Silke, 2003.
"Courts And Contract Enforcement In Transition Agriculture: Theory And Evidence From Poland,"
2003 Annual Meeting, August 16-22, 2003, Durban, South Africa
25878, International Association of Agricultural Economists.
- Beckmann, Volker & Boger, Silke, 2004. "Courts and contract enforcement in transition agriculture: theory and evidence from Poland," Agricultural Economics, Blackwell, vol. 31(2-3), pages 251-263, December.
- Durlauf, Steven N. & Fafchamps, Marcel, 2005.
Handbook of Economic Growth,
in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 26, pages 1639-1699
- Marcel Fafchamps & Steven N. Durlauf, 2004. "Social Capital," Economics Series Working Papers WPS/2004-14, University of Oxford, Department of Economics.
- Steven N. Durlauf & Marcel Fafchamps, 2004. "Social Capital," CSAE Working Paper Series 2004-14, Centre for the Study of African Economies, University of Oxford.
- Steven Durlauf & Marcel Fafchamps, 2004. "Social Capital," Development and Comp Systems 0409060, EconWPA.
- Durlauf,S.N. & Fafchamps,M., 2004. "Social capital," Working papers 12, Wisconsin Madison - Social Systems.
- Steven N. Durlauf & Marcel Fafchamps, 2004. "Social Capital," NBER Working Papers 10485, National Bureau of Economic Research, Inc.
- Grootaert, Christiaan & Narayan, Deepa, 2004. "Local Institutions, Poverty and Household Welfare in Bolivia," World Development, Elsevier, vol. 32(7), pages 1179-1198, July.
- Krishna, Anirudh, 2001. "Moving from the Stock of Social Capital to the Flow of Benefits: The Role of Agency," World Development, Elsevier, vol. 29(6), pages 925-943, June.
- Annen, Kurt, 2003. "Social capital, inclusive networks, and economic performance," Journal of Economic Behavior & Organization, Elsevier, vol. 50(4), pages 449-463, April.
- Eggertsson,Thrainn, 1990. "Economic Behavior and Institutions," Cambridge Books, Cambridge University Press, number 9780521348911.
- Bjornskov, Christian & Bogetic, Zeljko & Hillman, Arye & Popovic, Milenko, 2014.
"Trust and Identity in a Small, Post-Socialist, Post-Crisis Society,"
95968, ZBW - German National Library of Economics.
- Bjornskov, Christian & Bogetic, Zeljko & Hillman, Arye L. & Popovic, Milenko, 2014. "Trust and identity in a small, post-socialist, post-crisis society," Policy Research Working Paper Series 6828, The World Bank.
If references are entirely missing, you can add them using this form.