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on Informal and Underground Economics |
| By: | Aga,Gemechu A.; Campos,Francisco Moraes Leitao; Conconi,Adriana; Davies,Elwyn Adriaan Robin; Geginat,Carolin |
| Abstract: | In most countries in Africa, the informal sector is large and exhibits low levels of productivity compared to the formal economy: informal firms are typically small, inefficient, and run by entrepreneurs with low levels of education. This paper presents novel representative firm-level data collected on informal firms in the three largest cities of Mozambique, as well as data of microenterprises, formally registered businesses with less than 5 employees, the segment of the private sector that compares best to informal firms. Compared to formal microenterprises, informal firms sell about 14 times less, make 17 times lower profits and are 2–3 times less productive. Almost two-thirds (61 percent) of these performance gaps can be explained by differences in firm characteristics: informal firms are smaller and have limited skills, adapt fewer good business practices, use less capital and production inputs and are less likely to have access to finance. The rest of the productivity gap is explained by differential returns. Despite this “duality” between formality and informality, there is nevertheless a small but significant group of informal enterprises (7.6 percent of informal firms, representing 10.6 percent of employment in the informal sector) that in their characteristics and productivity levels are similar to formal microenterprises. Policies should take this heterogeneity into account. |
| Keywords: | Financial Sector Policy,Business in Development,Labor Markets,Common Carriers Industry,Plastics&Rubber Industry,Construction Industry,General Manufacturing,Textiles, Apparel&Leather Industry,Pulp&Paper Industry,Business Cycles and Stabilization Policies,Food&Beverage Industry |
| Date: | 2021–06–24 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:9712&r= |
| By: | Brockmeyer,Anne; Saenz Somarriba,Magaly Vanessa |
| Abstract: | Does the digitization of transactions in an economy increase tax compliance This paper studies theeffect of financial incentives on the adoption of electronic payment technology and on tax compliance by firms.Exploiting administrative data and policy variation from Uruguay, the paper shows that i) consumer value-added taxrebates for credit and debit card transactions trigger an immediate 50 percent increase in the number of cardtransactions, ii) firms' use of card machines increases only on the intensive margin, and iii) tax compliance isunaffected. Endogenous card machine adoption and a low share of card sales in total reported sales can rationalize the findings. |
| Keywords: | Tax Administration,Tax Law,Public Sector Economics,Public Finance Decentralization and Poverty Reduction,Financial Sector Policy,Labor Markets,International Trade and Trade Rules |
| Date: | 2022–02–24 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:9947&r= |
| By: | Amin,Mohammad |
| Abstract: | The informal sector is an important source of livelihoods and jobs for a vast majority of peoplein developing countries. However, there is concern that it may undermine growth and development of the formal sector.For instance, the growth literature indicates that research and development activity and innovation are a key driver oflong-term growth. How does the competition that formal sector firms face from informal sector firms affect researchand development activity by the formal firms The present paper attempts to answer this question using firm-levelsurvey data for small and medium-size enterprises in a large cross-section of mostly developing countries. The resultsshow that higher informal competition leads to greater a likelihood of spending on research and development by formalfirms. For the most conservative baseline specification, a one standard deviation increase in informal competitionleads to an increase of 5.2 percentage points in the likelihood of spending on research and development by formalfirms. This is a large increase given that less than 18 percent of the firms in the sample engage in research anddevelopment activity. Further, consistent with the “parasite” view of informality, the positive impact ofinformal competition on research and development activity is magnified when the business environment is less conducive tooperating in the formal sector compared with informal sector due to factors such as higher corruption, weaker rule oflaw, more burdensome business regulations, and a higher tax rate on profits. As expected, there is no impact of informalcompetition on research and development activity among large firms. The main findings are robust to several controls,alternative specifications, and endogeneity checks. |
| Keywords: | Labor Markets,Business Environment,Financial Sector Policy,Legal Products,Judicial System Reform,Regulatory Regimes,Legal Reform,Legislation,Social Policy |
| Date: | 2021–11–30 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:9868&r= |
| By: | Iimi,Atsushi |
| Abstract: | Informal public transport has been growing rapidly in many developing countries. Because urbaninfrastructure development tends to lag rapid population growth, informal public transport often meets the growinggap between demand and supply in urban mobility. Despite the rich literature primarily focused on formal transport modes,the informal transport sector is relatively unknown. This paper analyzes the demand behavior in the “informal” minibussector in Antananarivo, Madagascar, taking advantage of a recent user survey of thousands of people. It finds that thedemand for informal public transport is generally inelastic. Essentially, people have no other choice. While the timeelasticity is estimated at −0.02 to −0.05, the price elasticity is −0.05 to −0.06 for short-distance travelers,who may have alternative choices, such as motorcycle taxi or walking. Unlike formal public transportation, the demandalso increases with income. Regardless of income level, everyone uses minibuses. The estimated demand functionsindicate that people prefer safety and more flexibility in transit. The paper shows that combining these improvementsand fare adjustments, the informal transport sector can contribute to increasing people’s mobility and reducingtraffic congestion in the city. |
| Date: | 2022–04–18 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:10006&r= |
| By: | Islam,Asif Mohammed; Amin,Mohammad |
| Abstract: | This study uncovers a gender labor productivity gap among informal firms in 14 developing economies. The results show that labor productivity isapproximately 15.2 percent (or 0.165 log point) lower among women-owned than men-owned informal firms. Decompositiontechniques reveal several factors that contribute to lower labor productivity of women-owned informal firms relative tomen-owned informal firms. These include lower education, lower experience, lower capitalization, and less protectionfrom crime among women owners than men owners of informal firms. However, the smaller size of the women-owned firmsand their greater return from producing or selling under contract and from security payments narrows the productivitygap. The results provide several specific and general policy recommendations for improving the labor productivity ofwomen-owned informal firms and closing the gap with male-owned informal firms. For one, a substantial amount ofthe productivity gap can be closed by providing more resources to women such as education, managerial experience,and physical capital. The study also provides some preliminary results on another important policy objective—the costs and benefits of formalization as perceived by women-owned versus men-owned informal firms. |
| Date: | 2022–04–20 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:10011&r= |
| By: | Del Carmen,Giselle; Espinal Hernandez,Edgardo Enrique; De Gouvea Scot De Arruda,Thiago |
| Abstract: | Tax authorities often use low-cost communication with taxpayers to encourage voluntarycompliance and avoid other costly interventions. This paper reports findings from an experiment with more than 30,000taxpayers in Honduras, designed to assess how taxpayers with different risk scores respond to a communicationintervention. Across several outcomes, the average effect of the intervention on compliance was 0. Contrary to theexpectation of experts surveyed, only taxpayers considered to be at low risk of noncompliance increase their filing andreported income. Using rich administrative data and a causal forest algorithm, the paper finds that ex-ante predictedrisk and responsiveness to the intervention are negatively correlated. These findings can inform the design of targetedinterventions by tax authorities. |
| Date: | 2022–03–14 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:9967&r= |
| By: | Paul,Saumik; Raju,Dhushyanth |
| Abstract: | The movement of workers from the farm sector to a more productive nonfarm sector has failed to generate significant gains in labor productivity in recent decades in many developing countries. This paper offers a new perspective on the barriers to growth-enhancing structural transformation, combining structural modeling with enterprise census data from Ghana. The paper argues that subnational differences in the intersectoral productivity gap between the nonfarm informal and formal sectors constrain the productivity gain from structural transformation. In Ghana, intersectoral productivity gaps among the richer regions are on average three times larger than among the poorer regions. The disparity in regional intersectoral productivity gaps is modeled as reflecting the disparity in the regional misallocation of labor between the informal and formal sectors. Misallocation is identified as the output wedge between the informal and formal sectors. Simulations suggest that a more productive nonfarm informal sector reduces the disparity in regional intersectoral productivity gaps and, in turn, increases national productivity and the contribution of structural transformation to national productivity. For example, a 90-percent reduction in the disparity in regional intersectoral productivity gaps raises Ghana’s national aggregate productivity by 11.9 percent and the contribution of structural transformation to productivity by 19.7 percent. |
| Keywords: | Labor Markets,Food Security,Employment and Unemployment,International Trade and Trade Rules |
| Date: | 2021–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:9683&r= |
| By: | Timilsina,Govinda R.; Dissou,Yazid; Toman, Mike; Heine,Dirk |
| Abstract: | In an economy with substantial informality, a carbon tax can produce fiscal co-benefits that improve economic performance in addition to reducing carbon dioxide emissions. If the carbon tax revenues are used to cut production or labor taxes on formal firms, particularly those not in the energy sector, the cost of imposing the carbon tax is reduced, and there may even be net economic benefits. These tax cuts can also provide an incentive for informal firms to move to formal parts of the economy. This study confirms these hypotheses using a computable general equilibrium model for Côte d’Ivoire. However, the scale and even the sign of overall economic impacts and formal-informal sectoral interactions are sensitive to the scheme and scale of revenue recycling. The largest fiscal co-benefits, in terms of gross domestic product and economic welfare gains, would occur when the entire carbon tax revenue, after keeping the government revenue neutral, is used to cut existing labor or production taxes for non-energy formal firms. Reducing the existing value-added tax also increases gross domestic product and economic welfare, but without reducing the informality. The study also shows that energy producers should be exempted from using the carbon tax revenues to cut their production or labor taxes; otherwise, carbon dioxide reduction decreases due to a rebound effect. Although a carbon tax with lump-sum transfers of revenues is progressive, it would be economically inefficient because of gross domestic product and welfare reduction and lack of incentives to encourage informal activities to move to the formal parts of the economy. |
| Keywords: | Climate Change Mitigation and Green House Gases,Energy and Environment,Energy and Mining,Energy Demand,Labor Markets,Rural Labor Markets |
| Date: | 2021–06–23 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:9710&r= |
| By: | Elisa Casi; Mohammed Mardan; Rohit Reddy Muddasani |
| Abstract: | We study the short-term effect of the introduction of the mandatory disclosure programme for aggressive tax arrangements by focusing on the one introduced in May 2018 under Council Directive 2018/288/EU (or DAC6). Employing bilateral data on cross-border deposits, we study the effect of this new disclosure requirement on cross-border tax evasion. Our results show a reduction of cross-border deposits in EU countries with strong enforcement, captured by large monetary penalties for misreporting. |
| Keywords: | Tax evasion, Income under-reporting, Regulation, Wealth, Income |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp-2022-116&r= |
| By: | Gasmi, Farid; Kouakou, Dorgyles; Sanni, Maruf |
| Abstract: | At the turn of the millennium, developing countries face a twofold societal challenge. First, these countries need to understand the deep principles underpinning informality, which is by now recognized as a structuring phenomenon of their economies. Second, for reasons related to both intra- and inter-generational justice, these countries need to follow the sustainable development pathway. This paper highlights a micro-economic aspect of the relationship between these two goals by investigating how a firm being formal versus informal affects its sustainable and responsible innovation (S&RI) activity, a milestone for sustainable development. Using a propensity score matching methodological approach to analyze an original database extracted from the Nigerian Business Innovation Surveys for 2005-2007, we find that registered Nigerian firms have a higher propensity to introduce S&RIs than unregistered firms. This result is robust to alternative and widely used matching methods. Hence, in the prospect of sustainable development of Nigeria and developing countries in general, there should not be a hiatus between acknowledging and further understanding the importance of informality in the economy and promoting policies that give firms incentives to formalize. |
| Keywords: | Sustainable development; sustainable and responsible innovation; informality,; developing countries; Nigeria. |
| JEL: | O17 O35 O55 Q01 Q55 |
| Date: | 2022–10–06 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:127408&r= |
| By: | Aşık,Güneş; Bossavie,Laurent Loic Yves; Kluve,Jochen; Nas Ozen,Selin Efsan; Nebiler,Metin; Oviedo Silva,Ana Maria |
| Abstract: | This paper evaluates the impact of an employment subsidy scheme covering employers’ socialcontribution costs on registered employment in small firms in Turkey. It utilizes a rich, firm-level administrativedata set with monthly frequency, which allows for closely following the dynamics of registered employment in firmsbefore and after the implementation of the subsidy. The empirical approach utilizes the geographically targetedimplementation of the subsidy to estimate its effects using a difference-in-difference specification. The paper findsthat the subsidy scheme had a sizable and positive impact on registered employment in small firms. The results are robustacross specifications and to the choice of the control group. Positive effects on formal employment are also fairlyconstant and sustained over time. Corroborative evidence suggests that the positive effects on registered employmentare mainly driven by the formalization of existing workers as opposed to new job creation. Therefore, the resultsindicate that social security contribution subsidies in small firms can be effective in reducing informality incontexts where informal employment remains common. |
| Keywords: | Employment and Unemployment,Labor Markets,Rural Labor Markets,Labor Policies |
| Date: | 2022–01–19 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:9904&r= |
| By: | Hyland,Marie Caitriona,Islam,Asif Mohammed |
| Abstract: | This research explores the relationship between laws that discriminate on the basis of gender and the probability that a female-owned business begins operating in the informal sector. This is achieved by tracing the origins of formal businesses surveyed in the World Bank Enterprise Surveys and merging this with information on the level of legal equality between genders as measured by the Women, Business and the Law database. In addition, the research explores whether starting a business informally has any differential effect on subsequent firm performance depending on the gender of the owner(s). The results show that gender discriminatory laws increase the likelihood that firms with female owners will begin operations in the informal sector; as expected, this does not hold for enterprises that are solely owned by men. Furthermore, the research provides evidence that firms that began operations informally have poorer performance years later—a relationship that exists both for firms with female owners and for firms fully owned by men. The results show notable variation by region. |
| Keywords: | Labor Markets,Gender and Development,Anthropology,Gender and Social Development,Judicial System Reform,Employment and Unemployment |
| Date: | 2021–08–31 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:9766&r= |
| By: | Groeger,Andre; León-Ciliotta,Gianmarco; Stillman,Steven Eric |
| Abstract: | Venezuela is currently experiencing the biggest crisis in its recent history. This has led to alarge increase in emigration. According to recent estimates, there are a total of 5.6 million Venezuelan immigrantsworldwide with over one million now living in Peru, which has led to an over 2 percent increase in the country’spopulation. Unlike in many other episodes of refugee migration, Venezuelan immigrants are not only very similarin cultural terms, but are, on average, also more skilled than Peruvians. This study first examines Venezuelans’perceptions about being discriminated against in Peru. Using an instrumental variable strategy, the results document acausal relationship between the level of employment in the informal sector – where most immigrants are employed – andreports of discrimination. The second part is focused on studying the impact of Venezuelan migration on local’s labormarket outcomes, reported crime rates and attitudes using a variety of data sources. The results provide evidence thatinflows of Venezuelans to particular locations in Peru lead to better labor market outcomes for locals, decreasedreported crime, as well as improved reported quality of local services, greater trust in neighbors and highercommunity quality. |
| Keywords: | Rural Labor Markets,Human Rights,Crime and Society,Human Migrations & Resettlements,International Migration,Migration and Development,Labor Markets |
| Date: | 2022–03–23 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:9982&r= |
| By: | Okunogbe,Oyebola Motunrayo |
| Abstract: | Tax revenue in many low-income countries is inadequate for funding government investment ininfrastructure and public services. This paper examines two dimensions of low state capacity that hinder tax collection:the inability to ascertain the tax base (detection capacity) and the inability to enforce unpaid liabilities (enforcementcapacity). A randomized experiment with Liberian property owners finds that using identifying information from a newlydeveloped property database to alert property owners that their noncompliance has been detected quadruples the taxpayment rate, but only when the notice includes details on the penalties for noncompliance. A second experiment finds afurther increase in compliance from signaling greater enforcement probability to delinquent property owners. Theseresults highlight the importance of investments in both detection and enforcement capacity. |
| Keywords: | Public Finance Decentralization and Poverty Reduction,Tax Administration,Public Sector Economics,Macro-Fiscal Policy,Economic Adjustment and Lending,Taxation & Subsidies,Tax Law,Mining & Extractive Industry (Non-Energy),Crime and Society |
| Date: | 2021–11–17 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:9852&r= |
| By: | Cueva,Ronald; Del Carpio,Ximena Vanessa; Winkler,Hernan Jorge |
| Abstract: | This paper provides new evidence on the impacts of the COVID-19 economic crisis on a labor market with a high prevalence of informality. The analysis uses a rich longitudinal household survey for Peru that contains a host of individual and job outcomes before and during the first months of the lockdown in 2020. The findings show that workers who had jobs in non-essential and informal sectors were significantly more likely to become unemployed. In contrast to developed countries, having a job amenable to working from home is not correlated with job loss when controlling for informal status. This is consistent with the high level of labor market segmentation observed in Peru, where high-skilled occupations are disproportionately concentrated in the formal sector, which was also better targeted by policies aimed at supporting firms and job protection during the crisis. In addition, the findings show that women were more likely to lose their jobs because female-dominated sectors are more intensive in face-to-face interactions and thereby more affected by social distancing measures. Increased childcare responsibilities also help explain the worse impacts on women in rural areas. Finally, workers who depended on public transportation before the crisis were more likely to lose their jobs during the early months of the pandemic. |
| Keywords: | Labor Markets,Transport Services,Rural Labor Markets,Urban Transport,Transport in Urban Areas |
| Date: | 2021–05–25 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:9675&r= |
| By: | Aga,Gemechu A.; Francis,David C.; Jolevski,Filip; Rodriguez Meza,Jorge Luis; Wimpey,Joshua Seth |
| Abstract: | Informal business activity is ubiquitous around the world, but it is nearly alwaysuncaptured by administrative data, registries, or commercial sources. For this reason, there are rarely adequate samplingframes available for survey implementers wishing to measure the activity and characteristics of the sector. This paperpresents a methodology to generate a representative sample of informal businesses using an adaptive, geographicallybased method called Adaptive Cluster Sampling. Developed for populations that are clustered and/or rare, this methodhelps with efficiently sampling Primary Sampling Units—blocks—that are fully enumerated, and from whichSecondary Sampling Units—businesses—can be randomly sampled to conduct interviews. The paper shows how this methodologycan be applied to surveying informal businesses, often reducing both the average variance of population estimatesand fieldwork effort. Practical considerations and guidance for implementation and analysis are also provided. |
| Keywords: | Labor Markets,De Facto Governments,Economics and Finance of Public Institution Development,Public Sector Administrative & Civil Service Reform,State Owned Enterprise Reform,Public Sector Administrative and Civil Service Reform,Democratic Government,Green Issues,Climate Change and Agriculture |
| Date: | 2022–01–19 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:9905&r= |
| By: | Maruyama Rentschler,Jun Erik; Hosoe,Nobuhiro |
| Abstract: | This study develops a computable general equilibrium model for Nigeria, which accounts forinformality, tax evasion, and fuel smuggling. By studying the impact of fuel subsidy reform on consumption, taxincidence, and fiscal efficiency, it shows that the presence of illicit activities substantially strengthens the argumentin favour of subsidy reform: First, fuel subsidy reform can shift the tax base to energy goods, which are less prone totax evasion losses than for instance labour. Second, by reducing price differentials with neighbouring countries,subsidy reform reduces incentives for fuel smuggling. Overall, the results show that considering illicitactivities reduces the welfare losses of fuel subsidy reform by at least 40 percent. In addition, fuel subsidy reductions(and by extension energy tax increases) have a strong progressive distributional impact. The findings hold underdifferent revenue redistribution mechanisms, in particular uniform cash transfers and the reduction of pre-existinglabour taxes. |
| Keywords: | Social Conflict and Violence,Tax Law,Economic Assistance,Access of Poor to Social Services,Disability,Services & Transfers to Poor,Energy and Environment,Energy and Mining,Energy Demand,Energy Policies & Economics |
| Date: | 2022–01–20 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:9907&r= |
| By: | Chalendard,Cyril Romain; Fernandes,Ana Margarida; Raballand,Gael J. R. F.; Rijkers,Bob |
| Abstract: | This paper presents a new methodology to detect corruption in customs and applies it toMadagascar’s main port. Manipulation of assignment of import declarations to inspectors is identified by measuringdeviations from random assignment prescribed by official rules. Deviant declarations are more at risk of tax evasion,yet less likely to be deemed fraudulent by inspectors, who also clear them faster. An intervention in which inspectorassignment was delegated to a third party validates the approach, but also triggered a novel manifestation of manipulation that rejuvenated systemic corruption. Taxrevenue losses associated with the corruption scheme are approximately 3 percent of total taxes collected and highlyconcentrated among a select few inspectors and brokers. |
| Keywords: | International Trade and Trade Rules,Tax Law,Trade and Services,Labor Markets,Youth and Governance,Judicial System Reform,Public Sector Economics,Government Policies,Legal Products,Legal Reform,Legislation,Public Finance Decentralization and Poverty Reduction,Regulatory Regimes,Social Policy,National Governance |
| Date: | 2021–10–12 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:9802&r= |
| By: | Zarate Vasquez,Roman David |
| Abstract: | This paper proposes a new mechanism to explain resource misallocation in developing countries:the high commuting costs within cities that prevent workers from accessing formal employment. To test this mechanism,the paper combines a rich collection of microdata and exploits the opening of new subway lines in Mexico City. Thefindings show that transit improvements reduce informality by 7 percent in areas near the new stations. The paperdevelops a spatial model that accounts for the direct effects of infrastructure in perfectly economies andallocative efficiency. Changes in allocative efficiency driven by workers’ reallocation to the formal sector amplifythe gains by 20–25 percent. |
| Date: | 2022–03–30 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:9990&r= |
| By: | Karver,Jonathan George; Shijaku,Hilda; Ungerer,Christoph T F |
| Abstract: | This paper presents the results of a randomized controlled trial testing the effectiveness oftaxpayer communications informed by behavioral science in inducing business payroll tax compliance at the onset of theCOVID-19 pandemic. In March 2020, an experimental tax trial targeting 5,423 firms was implemented, coinciding with thenational lockdown due to the global pandemic. The Albanian tax authority sent postal letters to employers and selectedemployees highlighting a suspicion that wages were under-declared to avoid personal income tax withholding.Employers and employees suspected of under-declaring were randomly assigned to receive a soft-tone letter(highlighting the social importance of contributing through taxes), a strong-tone letter (highlighting the penaltiesassociated with under-declaring), or none (forming a control group against which the impact of receiving the letterscould be estimated). For employers receiving soft-tone letters, the study finds large, statistically significantincreases on subsequent payroll declarations (by as much as 10 percent relative to the control group), which graduallyattenuate over the following six months. No statistically significant effects are found for letters sent to employeesor strong-tone letters. The findings highlight (i) the importance of framing of communications as well as theimportance of smart selection of letter recipients for taxpayer communication campaigns, (ii) which type oftaxpayer communications were most effective in the context of the COVID-19 pandemic, and (iii) the role that randomizedcontrolled trials and behavioral science can play in strengthening the effectiveness of government policy,particularly for public revenue mobilization. |
| Keywords: | Tax Law,Public Finance Decentralization and Poverty Reduction,Tax Administration,Public Sector Economics,Democratic Government,De Facto Governments,Administrative & Civil Service Reform,Public Sector Administrative & Civil Service Reform,Public Sector Administrative and Civil Service Reform,International Trade and Trade Rules,Economic Adjustment and Lending,Taxation & Subsidies,Macro-Fiscal Policy |
| Date: | 2022–03–07 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:9961&r= |
| By: | Coville,Aidan; Galiani,Sebastian Franco; Gertler,Paul J.; Yoshida,Susumu |
| Abstract: | This study estimates the impacts of two interventions implemented as field experiments in informal settlements by Nairobi’s water and sanitation utility to improve revenue collection efficiency and last mile connection loan repayment: (i) face-to-face engagement between utility staff and customers to encourage payment and (ii) contract enforcement for service disconnection due to nonpayment in the form of transparent and credible disconnection notices. While there is no effect of the engagement, the study finds large effects of enforcement on payment. There is no effect on access to water, perceptions of utility fairness or quality of service delivery, on the relationships between tenants and property owners, or on tenant mental well-being nine months after the intervention. To counterbalance the increase in payments, property owners increased rental income by renting out additional space. Taken together these results suggest that transparent contract enforcement was effective at improving revenue collection efficiency without incurring large social or political costs. |
| Keywords: | Hydrology,Health and Sanitation,Small Private Water Supply Providers,Sanitary Environmental Engineering,Water and Human Health,Water Supply and Sanitation Economics,Town Water Supply and Sanitation,Engineering,Environmental Engineering,Sanitation and Sewerage,Health Care Services Industry |
| Date: | 2021–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:9725&r= |