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Using administrative data to evaluate municipal reforms : an evaluation of the impact of Minas Facil Expresso

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Author Info

  • Bruhn, Miriam
  • McKenzie, David

Abstract

Efforts to make it easier for firms to register formally are the most common form of business regulatory reform over the past decade. While there is evidence that large reforms have resulted in some increases in registration rates, recent experimental evidence suggests very few informal firms choose to register when given information about how to do so. This raises the question of whether it is productive for governments to continue to extend simplification efforts to all firms, especially those in more remote areas where many of the benefits of registering may be reduced. This study uses administrative data to evaluate the impact of Minas Facil Expresso, a program in the state of Minas Gerais, Brazil, which attempted to expand a business start-up simplification program to more remote municipalities. Using difference-in-differences with 56 months of registration data for 822 municipalities, the analysis finds introducing these units actually led to a reduction in registration rates, and no change in tax revenues. The paper uses this evaluation to illustrate the design choices and issues involved in using administrative data to evaluate reforms, with the goal of also providing a template that can be used for evaluating similar reforms elsewhere.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 6368.

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Date of creation: 01 Feb 2013
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Handle: RePEc:wbk:wbrwps:6368

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Related research

Keywords: Corporate Law; Urban Governance and Management; Regional Governance; Municipal Financial Management; Municipal Management and Reform;

This paper has been announced in the following NEP Reports:

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  1. 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.
  2. Orley Ashenfelter & David Card, 1984. "Using the Longitudinal Structure of Earnings to Estimate the Effect of Training Programs," Working Papers 554, Princeton University, Department of Economics, Industrial Relations Section..
  3. Bruhn, Miriam, 2008. "License to sell : the effect of business registration reform on entrepreneurial activity in Mexico," Policy Research Working Paper Series 4538, The World Bank.
  4. Klapper, Leora & Laeven, Luc & Rajan, Raghuram, 2006. "Entry regulation as a barrier to entrepreneurship," Journal of Financial Economics, Elsevier, vol. 82(3), pages 591-629, December.
  5. Kaplan, David S. & Piedra, Eduardo & Seira, Enrique, 2007. "Entry regulation and business start-ups : evidence from Mexico," Policy Research Working Paper Series 4322, The World Bank.
  6. de Mel, Suresh & McKenzie, David & Woodruff, Christopher, 2012. "The demand for, and consequences of, formalization among informal firms in Sri Lanka," Policy Research Working Paper Series 5991, The World Bank.
  7. David Kaplan & Eduardo Piedra & Enrique Seira, 2006. "Are Burdensome Registration Procedures an Important Barrier on Firm Creation? Evidence from Mexico," Discussion Papers 06-013, Stanford Institute for Economic Policy Research.
  8. Lee G. Branstetter & Francisco Lima & Lowell J. Taylor & Ana VenĂ¢ncio, 2010. "Do Entry Regulations Deter Entrepreneurship and Job Creation? Evidence from Recent Reforms in Portugal," NBER Working Papers 16473, National Bureau of Economic Research, Inc.
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