Formalizing employment in Africa's small firms: Experimental evidence from Côte D'Ivoire

Katharina Fietz, Tabea Lakemann, Bernd Beber, Jan Priebe and Jann Lay

No 1149, Ruhr Economic Papers from RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen

Abstract: Informal, low-quality employment in micro, small, and medium enterprises (MSMEs) remains a significant challenge in low- and middle-income countries. We present evidence from an impact evaluation of a light-touch business consulting program with a focus on employment formalization in Côte d'Ivoire. Using a randomized controlled trial with 448 MSMEs and a unique employer-employee dataset, we find that the intervention led to employment formalization, driven by greater reported minimum wage compliance and an increase in written contract provision. We show suggestive evidence that these improvements were driven by selective formalization and increased awareness of regulation. The intervention's financial implications were moderate, with findings indicating that firms partially formalized previously informal payment streams, without a significant increase in total labor costs.

Keywords: Employment formalization; business consulting; micro; small and medium enterprises(MSMEs); randomized controlled trial (RCT); Côte d'Ivoire (search for similar items in EconPapers)
JEL-codes: J46 J81 O12 O17 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:rwirep:315486

DOI: 10.4419/96973332

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