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Business Formalization in Vietnam

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  • Brian McCaig, Jordan Nanowski

    () (Wilfrid Laurier University)

Abstract

We estimate the impact of business formalisation using nationally representative panel data on businesses in Vietnam. Our data allows us to observe businesses for two surveys prior to obtaining a license and hence to control for differential trends before formalisation. We find that obtaining a license is not associated with an increase in profits or other business outcomes such as revenue, expenses, and employment once we control for differential trends. Controlling for trends is crucial, as estimates that ignore trends consistently find a larger positive association between becoming licensed and business performance. Our results suggest that inducing more businesses to register is unlikely to bring about large-scale changes for these businesses.

Suggested Citation

  • Brian McCaig, Jordan Nanowski, 2018. "Business Formalization in Vietnam," LCERPA Working Papers 0113, Laurier Centre for Economic Research and Policy Analysis, revised 01 Feb 2018.
  • Handle: RePEc:wlu:lcerpa:0113
    Note: LCERPA Working Paper No. 2018-7, February 2018.
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    References listed on IDEAS

    as
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    Keywords

    Informal; Formalization; Asia; Vietnam; Household business;

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