Some argue that informal business owners are viable entrepreneurs who do not register due to complex regulation. Others claim that they are making a living while searching for a job. This paper suggests that a mix of both views is correct. The author separate informal business owners into those who have characteristics similar to wage workers and to formal business owners and study the impact of a business registration reform in Mexico on these two species. Informal business owners from the wage worker species are less likely to register due to the reform, but more likely to become wage workers since the reform created jobs. Informal business owners from the formal business owner species are more likely to register, but only in municipalities with high pre-reform constraints to formal entrepreneurship. These results explain why the author finds no effect of the reform for all informal business owners taken together.
Information
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Auteur
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Date du document
2013/03/13
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Type de document
Article de revue
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Numéro du rapport
79460
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Volume
1
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Total Volume(s)
1
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Pays
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Région
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Date de publication
2017/04/05
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Disclosure Status
Disclosed
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Titre du rapport
A tale of two species : revisiting the effect of registration reform on informal business owners in Mexico
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Mots clé
informal business;wage worker;higher level of education;small business economics;Business Registration;linear time trend;constraints to entrepreneurship;formal social security;share of wage;engine of growth;reallocation of resource;misallocation of resources;quality control mechanism;degree of mobility;access to finance;informal labor market;taxes and labour;source of financing;amount of credit;public health insurance;inflow of workers;wage earner;municipality level;discriminant analysis;standard error;registered business;informal sector;fixed effect;informal firms;federal tax;commercial bank;fitted model;
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