Boly, A. 2015: “On the benefits of formalization, panel evidence from Vietnam”, UN WIDER Paper 2015/038

2.2 DECENT WORK AND ENTERPRISE GROWTH 

2.2.2 Formalising work in IE 

Recommendation: 4. Be aware that group formation of IE operators and workers into registered associations, cooperatives and other groups can also be a means to formalise the informal economy. Note that it is a misconception that formalising the informal economy entails only the registering of individual IE operations.

Reference: Boly, A. 2015: “On the benefits of formalization, panel evidence from Vietnam”, UN WIDER Paper 2015/038

Evidence sample: Boly (2015) surveyed 2,500 firms in Vietnam to investigate the process of firm formalisation. His results show that becoming formal leads to an increase in profits, value added and revenue, in total amount or per employee. Formalisation was also found to be beneficial for firms, irrespective of their size. While the benefits of formalisation were found to materialise in the short term, they also persisted over time. The benefits of formalisation run through better access to improved equipment, a larger customer base, advertising, and business association membership.