On the Benefits of Formalization: Panel Evidence from Vietnam

Amadou Boly

No wp-2015-038, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)

Abstract: This paper examines the relationship between formalization and firm-level outcomes in Vietnam using a unique panel dataset. Results show that switching firms differ from informal non-switching firms, confirming heterogeneity. We also find that becoming formal leads to increased profits, value added, and revenue. The performance of switching firms is higher than that of informal ones, but remains lower compared to non-switching formal firms. Our results suggest that the benefits of formalization materialize in the short term and persist over time.

Keywords: Informal; sector (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (1)

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