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dc.contributor.authorMcCulloch, Neilen_US
dc.contributor.authorSchulze, Günther G.en_US
dc.contributor.authorVoss, Janinaen_US
dc.description.abstractIn this paper we analyze the decision of small and micro firms to formalize, i.e. to obtain business and other licenses in rural Indonesia. We use the rural investment climate survey (RICS) that consists of non-farm rural enterprises, most of them microenterprises, and analyze the effect of formalization on tax payments, corruption, access to credit and revenue, taking into account the endogeneity of the formalization decision to such benefits and costs. We show, contrary to most of the literature, that formalization reduces tax and corruption payments. The benefits of formalization, and therefore the likelihood of being formal, also depend on characteristics such as firm size, as well as the education and ethnicity of the owner.en_US
dc.publisher|aUniv., Dep. of International Economic Policy |cFreiburgen_US
dc.relation.ispartofseries|aDiscussion Paper Series, University of Freiburg, Department of International Economic Policy |x13en_US
dc.subject.keywordrural developmenten_US
dc.subject.keywordrural investment climateen_US
dc.subject.keywordinformal sectoren_US
dc.titleWhat determines firms' decisions to formalize? Evidence from rural Indonesiaen_US
dc.typeWorking Paperen_US

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