Research Papers

Research Papers are journal articles or academic working papers. Find below the complete list of all the Research Papers produced by the team.

Research Papers Product year
  • Does Mobile Money Use Increase Firms' Investment? Evidence from Enterprise Surveys in Kenya, Uganda, and Tanzania

    Private investment can be an important engine of economic growth in East African countries, which, despite recent growth rates, are still plagued with adverse economic conditions. Against this backdrop, there has been substantial penetration of mobile money, moving beyond simple person-to-person exchanges toward adoption by private firms. This study explores whether there is a relationship between firm adoption of mobile money and firm investment. Using firm-level data that are nationally representative of the private sector in three East African countries.

  • Measuring Firm-Level Innovation Using Short Questionnaires

    Little is known about innovation in developing countries, partly because of the lack of comparable and reliable data. Collecting data on firm-level innovation is challenging because of the subjective definition of what determines an innovation, a problem that is exacerbated in developing countries where innovation is likely to be more incremental and less radical. This paper contributes to the literature by presenting the results of an experiment aiming to identify the survey instrument that better captures firm-level innovation in developing countries.

  • The Effect of the Swedish Payroll Tax Cut for Youths on Firm Profitability

    Payroll taxes in Sweden were reduced substantially for people ages 26 years or younger on July 1, 2007. The objective of this tax cut was to lower youth unemployment. The question of how gains from payroll taxes are distributed between workers and owners of firms has been the focus of considerable theoretical and empirical attention. This paper examines the impact of the Swedish reform on firm profits using individual-level and firm-level microdata. Previous investigations into the effects of this particular reform have focused entirely on the effects on employment and wages, or have been limited to the retail sector. This paper finds that the reform was not associated with a general increase in firm profitability, but that there is some evidence of a positive effect on profits in the retail and wholesale sector.

  • The Governance Environment and Innovative SME's

    This paper examines the impact of the governance environment on SME performance, concentrating on differences between innovators and non-innovators. A poor environment is related to lower profits and sales for SME innovators than non-innovators. Using a complementary indicator, SME innovators tend to have higher sales and profits when courts are perceived to be strong.

  • Absent Laws and Missing Women: Can Domestic Violence Legislation Reduce Female Mortality?

    This study contributes to the literature on legal institutions and determinants of adult mortality. The paper explores the relationship between the presence of domestic violence legislation and women-to-men adult mortality rates. Using panel data for about 95 economies between 1990 and 2012, the analysis finds that having domestic violence legislation leads to lower women-to-men adult mortality rates.

  • Does Paternity Leave Matter for Female Employment in Developing Economies?

    For a sample of 53 developing countries, the results show that women's employment among private firms is significantly higher in countries that mandate paternity leave versus those that do not. A conservative estimate suggests an increase of 6.8 percentage points in the proportion of women workers associated with the mandating of paternity leave.

  • An Exploration of the Relationship between Police Presence, Crime, and Business in Developing Countries

    Economic theory predicts that a rise in police presence will reduce criminal activity. However several studies in the literature have found mixed results. This study adds to the literature by exploring the relationship between the size of the police force and crime experienced by firms. Using survey data for about 12,000 firms in a cross-section of 27 developing countries, the study finds that increasing the size of the police force is negatively associated with crime experienced by firms.

  • Informal enterprises in Kenya

    The informal sector across Africa is ubiquitous, with a significant number of people engaged in small and household enterprises outside formal wage employment. Kenya’s informal sector is large and dynamic - 95 percent of the country’s businesses and entrepreneurs are in informal sector.

  • SMEs, Age, and Jobs: A Review of the Literature, Metrics, and Evidence

    The results for 117 developing economies using the World Bank’s Enterprise Survey Data, show that (i) small and medium enterprises and older establishments are the dominant employers in the nonagricultural private sector labor force in developing economies, and (ii) net job creation is negatively correlated with establishment age and, although the effect of size is also negative, its significance is sensitive to the definition and methods used.

  • Women managers and the gender-based gap in access to education

    Several studies explore the differences in men’s and women’s labor market participation rates and wages. Some of these differences have been linked to gender disparities in education attainment and access. Using firm-level data for 73 developing countries, the analysis finds strong evidence that countries with a higher proportion of female top managers also have higher enrollment rates for women relative to men in primary, secondary, and tertiary education.

  • Catching up to the technological frontier? Understanding firm-level innovation and productivity in Kenya

    Kenya’s economy has undergone a significant process of structural transformation over the last decade. The analysis of this report shows some important stylized facts regarding firm level innovation in Kenya.

  • Are there more female managers in the retail sector?

    This research paper uses firm-level data for 87 developing countries to analyze how the likelihood of a firm having female vs. male top manager varies across sectors. The service sector is often considered to be more favorable toward women compared with men vis-à-vis the manufacturing sector.

  • Do government private subsidies crowd out entrepreneurship?

    This study explores the relationship between government private subsidies and entrepreneurship by combining macroeconomic government spending data with individual level entrepreneurship data. The paper finds a negative association between the share of private subsidies and entrepreneurship. However, findings are less straightforward when the analysis delves deeper into the components of private subsidies and their association with different types of entrepreneurship.

  • Does mandating nondiscrimination in hiring practices influence women’s employment?

    This study explores the relationship between mandating a nondiscrimination clause in hiring practices along gender lines and the employment of women versus men in 58 developing countries. The study finds a strong positive relationship between a nondiscrimination in hiring clause and women’s relative to men’s employment.

  • Economic growth and crime against small and medium sized enterprises in developing economies

    This study uses data for about 12,000 firms in 27 developing countries and finds that higher economic growth is associated with lower crime. This relationship is stronger for small and medium firms than large firms.

  • Imports of intermediate inputs and country size

    The paper analyzes the relationship between country size and the use of imported intermediate inputs by firms in 76 developing countries. Recent evidence indicates that the use of imported inputs can have a large, positive effect on productivity and growth, thus motivating a better understanding of the determinants of foreign inputs.

  • Use of imported inputs and the cost of importing: Evidence from developing countries

    For a representative sample of manufacturing firms in 26 countries, this paper shows that changes in the cost of importing over time are significantly and negatively correlated with changes in the percentage of firms’ material inputs that are of foreign origin. Furthermore, the paper shows that there may be a nonlinear relationship between import costs and imports. These findings are important, as recent stud-ies point toward a significant positive effect of imported inputs on productivity and growth. It is hoped that the present paper inspires more work on the determinants of the use of imported inputs, especially in developing countries.

  • What have we learned from the Enterprise Surveys regarding access to finance by SMEs?

    This paper uses a new measure to explore the availability of credit to SMEs in the developing world. SMEs are found to be more credit constrained and more likely to finance their working capital and investments through trade credit and informal sources of finance. Besides size, other firm characteristics are examined.

  • Benchmarking Financial Systems, Introducing the Financial Possibility Frontier

    Across the world, supply for financial services rarely matches the demand, given multiple market frictions. This paper discusses the concept of the financial possibilities frontier as a constrained optimum to categorize different problems of shallow financial markets or unsustainable expansion. The paper offers three examples of how to use different data sources to apply the frontier concept to assess the state of financial systems.

  • Gender based differences in managerial experience: The case of informal firms in Rwanda

    The paper contributes to the literature on gender-based disparity in human capital by extending existing results on education attainment to the number of years of experience that female vs. male managers have among informal or unregistered firms. Using the case of Rwanda, results show that the number of years of experience for female managers is significantly lower, equating 80-88 percent that of male managers. We also find that this gender disparity is higher among the relatively older managers and among firms in the relatively less developed city of Butar compared with the more developed city of Kigali.

  • Trade facilitation and country size

    It is argued that compared with large countries, small countries rely more on trade and therefore they are more likely to adopt liberal trading policies. The present paper extends this idea beyond the conventional trade openness measures by analyzing the relationship between country size and the number of documents required to export and import, a measure of trade facilitation.

  • Gender disparity in human capital: Going beyond schooling

    The paper contributes to the literature on gender-based disparity in human capital by extending existing results on educational attainment to the number of years of experience that top female and male managers have. For a sample of 71 developing countries, results show that the number of years of experience for female managers is significantly lower, equaling 83-86 percent that of their male counterparts.

  • Importing, exporting and innovation in developing countries

    Recent studies have shown that both importers and exporters perform better than firms that serve only domestic markets. Using a detailed plant level dataset from 40 developing countries, this paper shows that there are persistent differences in firm evolution when they are grouped according to their trade orientation as: two-way traders (both importing and exporting), only importers, only exporters, and non-traders.

  • The time cost of documents to trade

    Increased documentation required for exports and imports increases the time it takes to clear customs. But this effect is much less for rich than for poor countries and for small vs. large countries.

  • Trade policies, investment climate and exporters

    Trade liberalization policies undertaken between 1950 and 2006 led to an almost 30 fold growth in the volume of international trade. However this increase has not been homogeneous across countries.

  • Gender and firm-size: Evidence from Africa

    A number of studies show that relative to male owned businesses, female owned businesses are smaller in size. However, these studies are restricted to the developed countries. We find similar results for firms in the unregistered sector of developing countries of Burkina Faso, Cameroon, Cape Verde, Ivory Coast, Madagascar and Mauritius.

  • Obstacles to growth for small and medium enterprises in Turkey

    Many studies have shown that firm growth decreases monotonically with size and age. In this study, the authors investigate employment growth of firms in Turkey with an emphasis on small and medium size enterprises. In Turkey, small and medium size enterprises account for almost 77 percent of employment and play a crucial role in the economy.

  • Rigidities in employment protection and exporting

    A large number of studies have shown that contribution of exporters to economic growth and development is much higher than non-exporting firms. This evidence has lead governments to improve their trade policies in order to increase foreign exposure of firms. However, improvements in trade policies can only be fully effective when they are complemented with other regulatory reforms that improve the investment climate for firms.

  • The effect of corporate taxes on investment and entrepreneurship

    We present new data on effective corporate income tax rates in 85 countries in 2004 from a survey of all taxes imposed on “the same” standardized mid-size domestic firm. In this cross-section, our estimates of the effective corporate tax rate have a large adverse impact on aggregate investment, FDI, and entrepreneurial activity.

  • A structural model of establishment and industry evolution: Evidence from Chile

    Many recent models have been developed to fit basic facts on establishment and industry evolution. While these models yield a simple interpretation of the basic features of the data, they are too stylized to confront the micro-level data in a more formal quantitative analysis. In this paper, I develop a model in which establishments grow by innovating new products.

  • Democracy and reforms

    We use a sample of 147 countries to investigate the link between democracy and reforms. Democracy may be conducive to reform, because politicians have the incentive to embrace growth-enhancing reforms to win elections. On the other hand, authoritarian regimes do not have to worry as much about public opinion and may undertake reforms that are painful in the short run but bring future prosperity.

  • Labor productivity in the informal sector: Necessity vs. opportunity firms

    Differences between opportunity and necessity firms within the informal sector have long been debated. This paper revisits this debate using a new dataset of informal firms in three African countries. Focusing on average productivity of labor, a measure of firm efficiency, we find that it is much higher for opportunity compared with necessity firms.

  • Multinational firms, global value chains and the organization of knowledge transfer

    Differences between opportunity and necessity firms within the informal sector have long been debated. This paper revisits this debate using a new dataset of informal firms in three African countries. Focusing on average productivity of labor, a measure of firm efficiency, we find that it is much higher for opportunity compared with necessity firms.

  • Natural resources and reforms

    The authors use a sample of 133 countries to investigate the link between the abundance of natural resources and micro-economic reforms. Previous studies suggest that natural resource abundance gives rise to governments that are less accountable to the public and states that are oligarchic, and that it leads to the erosion of social capital.

  • Obstacles to registering: Necessity vs. opportunity entrepreneurs

    Using a new dataset on informal or unregistered firms in Ivory Coast, Madagascar and Mauritius, this paper identifies the type of firms or entrepreneurs that experience greater obstacles to registering. We find important differences between necessity and opportunity entrepreneurs.

  • Capital immobility and regional inequality: Evidence from India

    It shows that there are large regional differences in returns to factory investment, implying poor spatial capital mobility within India, which calls for financial markets reform.

  • Employment laws in developing countries

    We survey the research on the effect of employment laws in developing countries, using papers published since 2004. The survey is further supported by cross-country correlation analyses. Both exercises show that developing countries with rigid employment laws tend to have larger informal sectors and higher unemployment, especially among young workers.

  • Enforceability of labor law: Evidence from a labor court in Mexico

    The authors analyze lawsuits involving publicly-appointed lawyers in a labor court in Mexico to study how a rigid law is enforced. They show that, even after a judge has awarded something to a worker alleging unjust dismissal, the award goes uncollected 56 percent of the time.

  • Helpful governments

    The paper provides an alternative way of testing for the theory of legal origins, one based on firm’s perception of how helpful the government is for doing business. We argue that our approach based on firm perceptions offers a number of advantages over existing studies.

  • Intellectual property rights and innovation in developing countries: Evidence from India

    There have been large increases in R&D spending after patent law reforms in India, suggesting that intellectual property rights matter to innovation in developing countries. India, along with several other developing countries, signed the Trade Related Aspects of Intellectual Property (TRIPs) Agreement in 1994, and became obligated to amend its domestic intellectual property rights laws within ten years.

  • Job creation and labor reform in Latin America

    This paper studies the effects of labor-regulation reform using data for 10,396 firms from 14 Latin American countries. Firms are asked both how many permanent workers they would have hired and how many they would have terminated if labor regulations were made more flexible. I find that making labor regulations more flexible would lead to an average net increase of 2.08 percent in total employment.

  • Mexico: Who are the unbanked?

    We use nationally representative survey data from Mexico to compare households with savings accounts in formal financial institutions to their neighbors who do not have such accounts. The survey was conducted in 2005 and contains information on nearly 5000 households.

  • The cost of registering property: Does legal origin matter?

    There is a large literature that finds that common law countries perform better than civil law countries in various aspects of the institutional environment.

  • The impact of improved highways on Indian firms

    India's Golden Quadrilateral Program aimed at improving the quality and width of existing highways connecting the four largest cities in India. This affected the quality of highways available to firms in cities that lie along the routes of the four upgraded highways, while leaving the quality of highways available to firms in other cities unaffected.

  • What firms know

    A large literature shows that the legal tradition of a country is highly correlated with various dimensions of institutional quality. Broadly, studies show that English common law countries perform better than the French civil law countries with respect to the regulatory burden on firms, efficiency of courts and contract enforcement, corruption, and overall governance.

  • When does legal origin matter?

    This paper takes another look at the extent of business regulation in civil law versus common law countries. In contrast to existing studies that find a heavier role of government regulation in the civil law countries, we show that this holds only for a subset of civil and common law countries that have well developed political institutions but not otherwise.

  • Are labor regulations driving computer usage in India's retail stores?

    A recent survey of 1,948 retail stores in India conducted by the World Bank’s Enterprise Surveys shows that 19 percent of the stores use computers for their business. In some states like Kerala, computer usage is as high as 40 percent. Using this data we find labor regulation as an important determinant of computer usage.

  • Competition and demographics in large Indian cities

    Between 1991 and 2001, the number of adult non-workers per household showed a secular decline in most parts of India. The decline was as sharp as 18.6 percent in the state of Haryana, 12.7 percent in Kerala and 12.6 percent in Punjab. The paper estimates the likely effect of these changes on market competition using micro data on retail stores in India.

  • Competition and labor productivity in India's retail stores

    The paper analyzes the effect of product market competition on the average productivity of labor in India’s retail sector. The authors use a new dataset of 1,948 retail stores located in 41 cities of India compiled by the World Bank’s Enterprise surveys. According to the survey, 62% of the stores do not face any significant competition.

  • Entry regulation and business start-ups: Evidence from Mexico

    The authors estimate the effect on business start-ups of a program that significantly speeds up firm registration procedures. The program was implemented in Mexico in different municipalities at different dates.

  • Financial development and innovation in small firms

    Firm-level data from a cross-section of 57 countries is used to study how financial development affects innovation in small firms. The author finds that relative to large firms in the same industry, R\&D spending by small firms is more likely and sizable in countries at higher levels of financial development.

  • How sensitive are Latin American exports to Chinese competition in the U.S. market?

    In this paper we estimate the elasticity of substitution of US imports using detailed trade data over the 1990-2003 period. We use a two-stage least squares framework in order to identify the elasticity parameter of interest. Our elasticity estimates for aggregate imports are in line with those of other recent studies.

  • Labor regulation and employment in India's retail stores

    A new dataset of 1,948 retail stores in India compiled by the World Bank's Enterprise Surveys shows that 27 percent of the stores report labor regulations as a problem for their business. Using these data we analyze the effect of labor regulation on employment at the store level.

  • Litigation and settlement: New evidence from labor courts in Mexico

    Using a newly assembled data set on procedures filed in Mexican labor tribunals, the authors of this paper study the determinants of final awards to workers. On average, workers recover less than 30 percent of their claim. The strongest result is that workers receive higher percentages of their claims in settlements than in trial judgments.

  • Mexican employment dynamics evidence from matched firm-worker data

    Using a census of all workers in private establishments in the formal sector in Mexico to track workers and establishments over time, this paper presents the first Mexican worker and job flow statistics. The data allow for comparing these flows across time, space, and worker characteristics.

  • Remittances and banking services: Evidence from Mexico

    Despite the rising volume of remittances flowing to developing countries, their impact on the development of banking services in recipient countries has been largely unexplored. We examine this topic using county-level data for Mexico on the fraction of households that receive remittances and measures of both banking breadth (e.g., branches or accounts per capita) and depth (e.g., deposits or credit to GDP).

  • The incidence of graft on developing-country firms

    The authors measure the extent to which firms in developing countries are the target of bribes. Using new firm-level survey data from 33 African and Latin American countries, the analysis shows that perceptions adjust slowly to firms’ experience with corrupt officials and hence are an imperfect proxy for the true incidence of graft.

  • The Persistence of Corruption in Brazil

    Corruption imposes substantial economic costs, yet there is little evidence on the success of anti-corruption campaigns. The author studied the 1992 impeachment of president Collor in Brazil to evaluate its impact on politically connected companies both in the short- and long-term. Using an event study methodology, the short-run effect is established: family-connected firms on average lose 2 to 9 percentage points of their value on dates when information damaging to the impeached president is released. However, this decline is reversed entirely within one year. The author concludes that the impeachment had limited success in reducing corruption in Brazil.

  • When do creditor rights work?

    Creditor-friendly laws are generally associated with more credit to the private sector and deeper financial markets. But laws mean little if they are not upheld in the courts. The authors hypothesize that the effectiveness of creditor rights is strongly linked to the efficiency of contract enforcement. This hypothesis is tested using firm-level data on 27 European countries in 2002 and 2005.

  • When do enterprises prefer informal credit?

    The authors tested the hypothesis that enterprises may forgo formal finance in lieu of informal credit by choice. They do so to avoid the additional regulatory scrutiny and harassment that engaging with the formal financial sector invites. The hypothesis is tested using enterprise level data on 3564 enterprises in 29 countries.

  • Who fears competition from informal firms? Evidence from Latin America

    This paper investigates who is most affected by informal competition and how regulation and enforcement affect the extent and nature of this competition. Using newly-collected enterprise data for 6,466 manufacturing formal firms across 14 countries in Latin America, the authors show that formal firms affected by head-to-head competition with informal firms largely resemble them.

  • Entrepreneurship in China and Russia compared

    We compare results from a pilot study on entrepreneurship in China and Russia. Compared to non-entrepreneurs, Russian and Chinese entrepreneurs have more entrepreneurs in their family and among childhood friends, value work more relative to leisure and have higher wealth ambitions.

  • Regulation and growth

    Using objective measures of business regulations in 135 countries, we establish that countries with better regulations grow faster. Improving from the worst quartile of business regulations o the best implies a 2.3 percentage point increase in annual growth.

  • Who are China's entrepreneurs?

    This research finds that controlling for institutional environment entrepreneurs in China are much more likely to have family members who are entrepreneurs as well as childhood friends who became entrepreneurs, suggesting that social environment plays an important role in entrepreneurship. Entrepreneurs also differ strongly from non-entrepreneurs in their attitudes toward risks and their work-leisure preferences.