TY - JOUR
T1 - Business training programs and microenterprise formalization in Peru
AU - Barron, Manuel
N1 - Publisher Copyright:
© 2020, © 2020 The Author(s). This open access article is distributed under a Creative Commons Attribution (CC-BY) 4.0 license.
Copyright:
Copyright 2020 Elsevier B.V., All rights reserved.
PY - 2020/7/13
Y1 - 2020/7/13
N2 - 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.
AB - 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.
KW - M13Entrepreneurship
KW - M53Training
KW - O12Microeconomic Analyses of Economic Development
KW - entrepreneurship
KW - microenterprise formalization
KW - training
KW - M13Entrepreneurship
KW - M53Training
KW - O12Microeconomic Analyses of Economic Development
KW - entrepreneurship
KW - microenterprise formalization
KW - training
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UR - http://www.scopus.com/inward/record.url?scp=85087915769&partnerID=8YFLogxK
UR - https://www.mendeley.com/catalogue/d9e26def-ff5d-3458-bbc5-80f9c3f28020/
U2 - 10.1080/23322039.2020.1791546
DO - 10.1080/23322039.2020.1791546
M3 - Article in a journal
VL - 8
JO - Cogent Economics and Finance
JF - Cogent Economics and Finance
IS - 1
M1 - 1791546
ER -