Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/229371
Authors: 
Dang, Duc Anh
La, Hai Anh
Year of Publication: 
2020
Series/Report no.: 
WIDER Working Paper No. 2020/147
Abstract: 
The literature shows that political connections have different effects on firms' activities. However, the question of how political connections affect firms' formalization has not been explored. Using data from three waves of the Vietnam Small and Medium Enterprise Survey for the period from 2007 to 2011, this paper aims to examine the relationship between political connections and firms' formalization in Viet Nam. We find that firms with political connections increase their share of formal workers. The results also show that smaller firms tend to be more formalized if they have political connections. To overcome bias and inconsistency concerns due to potential omitted variables and reverse causality, we use political connections in a firm's industry in other districts as an instrumental variable. The instrumental variable results confirm our previous results that political connections do indeed lead to a higher level of formalization.
Subjects: 
political connections
formalization
Viet Nam
JEL: 
D72
E26
Persistent Identifier of the first edition: 
ISBN: 
978-92-9256-904-4
Document Type: 
Working Paper

Files in This Item:
File
Size
407.34 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.