Informal Firms in Developing Countries: Entrepreneurial Stepping Stone or Consolation Prize?

John Bennett (j.bennett@rhul.ac.uk)

No RP2009-19, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)

Abstract: We analyse potential dynamic benefits for a firm from having the option of adopting informal status. Informality may be a stepping stone, without which formality might never be achieved. This result obtains for a broad range of realistic parameter values, suggesting a potential dynamic case for government support of informal firms. Informality may alternatively play a converse role as a consolation prize, a firm only entering an industry (formally) because it recognizes that if profitability is disappointing, it can switch to informality.

Keywords: Business enterprises; Entrepreneurship; Informal sector (search for similar items in EconPapers)
Date: 2009
New Economics Papers: this item is included in nep-com, nep-dev and nep-ent
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://www.wider.unu.edu/sites/default/files/RP2009-19.pdf (application/pdf)

Related works:
Journal Article: Informal firms in developing countries: entrepreneurial stepping stone or consolation prize? (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:unu:wpaper:rp2009-19

Access Statistics for this paper

More papers in WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER) Contact information at EDIRC.
Bibliographic data for series maintained by Siméon Rapin (repec@wider.unu.edu).