Business training programs and microenterprise formalization in Peru

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4 Scopus citations

Abstract

A large share of workers in developing countries are constrained to self-employment mainly due to lack of opportunities in wage employment, becoming entrepreneurs de facto constrained to the informal sector, with meager profits and poor working conditions. In response to this problem, several governments offer business training programs targeted at these entrepreneurs with two aims: to improve business outcomes and to promote enterprise formalization. This paper explores the relation between business training programs and formalization using data of 1,133 participants in two entrepreneurship programs in Peru. Difference-in-differences with various matching techniques indicate that formalization increased by 20–25 percentage points 2 years after program participation. This study presents suggestive evidence of three potential mechanisms behind this increased formalization rates: the opportunity to reconsider participants’ original business plans, the demystification of the tax procedures, and access to seed capital.

Original languageEnglish
Article number1791546
Number of pages13
JournalCogent Economics and Finance
Volume8
Issue number1
DOIs
StatePublished - 13 Jul 2020

Keywords

  • M13Entrepreneurship
  • M53Training
  • O12Microeconomic Analyses of Economic Development
  • entrepreneurship
  • microenterprise formalization
  • training

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