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MSMEs and Informality: A new employer-employee database for Colombia

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dc.creatorFernández Mejía, Cristina
dc.date.accessioned2025-02-04T15:02:42Z
dc.date.available2025-02-04T15:02:42Z
dc.date.created2025-01-30
dc.date.issued2025-01-31
dc.description.abstractIn Colombia, as in many other countries, there is a lack of comprehensive and recurring information on business demographics. This paper creates a method to generate a periodic firm-employee database that allows for the first analysis of the entire universe of firms in the country. It also creates a methodology suitable for implementation in countries with limited business information. After excluding self-employment (43% of workers) and agriculture, this paper identifies five stylized facts on business demographics in Colombia: 1. Micro-businesses account for 93% of firms, 31% of workers and 9% of the value added. This granularity can be partially explained by a tax waiver on small businesses. 2. The informality of business (from 30% to 88% under the registration or taxes criteria, respectively) is decreasing in the number of employees. This behavior can be explained because small and unproductive firms cannot afford formality, whereas larger firms find profitable to operate formally. 3. Labor informality is high (71% among firms, and 27% among workers) and also decreasing in the number of amployees. This diminishing trend, that in turn is related to small firms hiring few skilled workers, can be explained by a stronger enforcement on larger firms, plus asymmetric taxes. The after tax relative cost of hiring formally is ten times higher for small companies. 4. The incidence of poverty in micro-business is three times higher than in larger firms. 5. Overall, there are incentives for firms to remain small, but also incentives for small firms to do not use capital and skilled workers, affecting productivity and poverty.
dc.format.extent28 pp
dc.format.mimetypeapplication/pdf
dc.identifier.doihttps://doi.org/10.48713/10336_44923
dc.identifier.urihttps://repository.urosario.edu.co/handle/10336/44923
dc.language.isospa
dc.publisherUniversidad del Rosario
dc.publisher.departmentFacultad de Economía
dc.rightsAttribution-NonCommercial-ShareAlike 4.0 International*
dc.rights.accesRightsinfo:eu-repo/semantics/openAccess
dc.rights.accesoAbierto (Texto Completo)
dc.rights.urihttp://creativecommons.org/licenses/by-nc-sa/4.0/*
dc.source.bibliographicCitationAlvarez, J., & Ruane, M. C. (2019). Informality and Aggregate Productivity: The Case of Mexico. International Monetary Fund.
dc.source.bibliographicCitationAngulo, R. (2023). ´Indice Multidimensional de Robustez de Micronegocios (IMICRO). Diseno˜ y Resultados para una Estrategia de Focalizacion de la Secretar ´ ´ıa Distrital de Desarrollo Economico de Bogot ´ a. ´ (Tech. Rep.). Bogota, Colombia: Inclusi ´ on SAS.
dc.source.bibliographicCitationDANE. (2013). General Methodology: Large Integrated Household Survey – GEIH
dc.source.bibliographicCitationDANE. (2020a). General Methodology: Annual Services Survey – EAS.
dc.source.bibliographicCitationDANE. (2020b). General Methodology: Annual Trade Survey – EAC.
dc.source.bibliographicCitationDANE. (2020c). General Methodology: Survey Micro-establishments – EMICRON.
dc.source.bibliographicCitationDANE. (2021). Economic Census of Colombia: Economic Census Methodological Document.
dc.source.instnameinstname:Universidad del Rosario
dc.source.reponamereponame:Repositorio Institucional EdocUR
dc.subject.jelJ46
dc.subject.jelO17
dc.subject.jelL11
dc.subject.jelO47
dc.subject.keywordInformality
dc.subject.keywordFirm informality
dc.subject.keywordInformal labor market
dc.subject.keywordTaxonomy of informality
dc.subject.keywordPolicy recommendations for informality
dc.subject.keywordFirm size distribution
dc.subject.keywordInformality and taxes
dc.subject.keywordInformality and productivity
dc.titleMSMEs and Informality: A new employer-employee database for Colombia
dc.typeworkingPaper
dc.type.hasVersioninfo:eu-repo/semantics/draft
dc.type.spaDocumento de trabajo
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