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Firm Dynamics and Institutional Participation: A Case Study on Informality of Micro Enterprises in Peru

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Author Info
Jackle, Annette E
Li, Carmen A

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Abstract

Using panel data on micro enterprises from Peru we find evidence suggesting that firm dynamics explain "formality," where formality is recast as the firm's decision to participate in societal institutions. The results suggest that differences in unobservable factors, such as entrepreneurial ability, contribute largely to differences in growth rates, survival chances, and societal participation. After controlling for such unobserved heterogeneity, we find that the probability of participation increases with firm size but not with years in business. Changes in participation status are sensitive to the initial size and growth trajectory of the firm.

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Publisher Info
Article provided by University of Chicago Press in its journal Economic Development and Cultural Change.

Volume (Year): 54 (2006)
Issue (Month): 3 (April)
Pages: 557-78
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Handle: RePEc:ucp:ecdecc:y:2006:v:54:i:3:p:557-78

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References listed on IDEAS
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.:
  1. Feige, Edgar L., 1990. "Defining and estimating underground and informal economies: The new institutional economics approach," World Development, Elsevier, vol. 18(7), pages 989-1002, July. [Downloadable!] (restricted)
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  2. Esfahani, Hadi S & Salehi-Isfahani, Djavad, 1989. "Effort Observability and Worker Productivity: Towards an Explanation of Economic Dualism," Economic Journal, Royal Economic Society, vol. 99(397), pages 818-36, September. [Downloadable!] (restricted)
  3. Mazumdar, Dipak, 1983. "Segmented Labor Markets in LDCs," American Economic Review, American Economic Association, vol. 73(2), pages 254-59, May. [Downloadable!] (restricted)
  4. Fenn, P & Veljanovski, C G, 1988. "A Positive Economic Theory of Regulatory Enforcement," Economic Journal, Royal Economic Society, vol. 98(393), pages 1055-70, December. [Downloadable!] (restricted)
  5. Loayza, Norman V., 1996. "The economics of the informal sector: a simple model and some empirical evidence from Latin America," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 45(1), pages 129-162, December. [Downloadable!] (restricted)
  6. Loayza, Norman A., 1997. "The economics of the informal sector : a simple model and some empirical evidence from Latin America," Policy Research Working Paper Series 1727, The World Bank. [Downloadable!]
  7. R. Hirschowitz, 1989. "The Other Path: The Invisible Revolution in the Third World," South African Journal of Economics, Economic Society of South Africa, vol. 57(4), pages 266-272, December. [Downloadable!] (restricted)
  8. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-70, May. [Downloadable!] (restricted)
  9. Rauch, James E., 1991. "Modelling the informal sector formally," Journal of Development Economics, Elsevier, vol. 35(1), pages 33-47, January. [Downloadable!] (restricted)
  10. Peattie, Lisa, 1987. "An idea in good currency and how it grew: The informal sector," World Development, Elsevier, vol. 15(7), pages 851-860, July. [Downloadable!] (restricted)
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  1. Esther K. Ishengoma & Robert Kappel, 2006. "Economic Growth and Poverty: Does Formalisation of Informal Enterprises Matter?," GIGA Working Paper Series 20, GIGA German Institute of Global and Area Studies. [Downloadable!]
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