Working Papers
Shedding light on the shadows of informality: A meta-analysis of formalization interventions targeted at informal firms
[Revise & Resubmit from Labour Economics]
with Andrea Floridi and Binyam A. Demena
Governments and policy-makers promote formalization through various interventions ranging from simplifying registration procedures to increasing enforcement of the law. But despite various efforts, not much is known about the effects of interventions aiming at formalizing informal firms. This meta-analysis examines the empirical literature on the impact of such formalization interventions. We systematically assessed the literature on the impact of formalization policies resulting in 568 observations from 18 studies conducted by 33 researchers and published until June 2018. We analyzed the meta-impact of (i) cost, (ii) benefit and (iii) enforcement policy interventions and assessed whether the resulting outcomes are influenced by the type of data, econometric approach, and specification as well as publication bias. The findings suggest that policies increasing the benefits after formalization are associated with the highest formalization rates. Yet, the overall impact of the studied policy interventions remains weak when we control for publication quality and method heterogeneity. Overall, we only find modest evidence for increased formalization associated with the so far implemented interventions suggesting that further piloting and experimenting is needed to achieve large-scale formalization of the informal economy.
The impact of off-grid solar home systems in Kenya on energy consumption and expenditures
[Revise & Resubmit from World Development]
with Matthias Rieger, Arjun S. Bedi, Jurgen Vermeulen and Binyam A. Demena
This paper assesses the impact of solar home systems (SHS) on energy consumption and energy-related expenditures among Kenyan households. Based on a pipeline comparison approach of more than a thousand households, we find that access to a SHS leads to a net increase of 24 to 36 minutes in daily lighting use due to a three hour increase in the use of LED lamps, accompanied by a reduction in the use of “dirty” lamps. We also find a one litre reduction in the monthly use of kerosene for lighting. These changes in energy use along with a decline in the cost of charging mobile phones leads to a reduction in overall monthly expenditure of KSh 193 (about EUR 1.60). For the most popular SHS, these economic effects translate into a payback period of about six years. In addition to the economic benefits, we find small positive environmental effects, increased satisfaction from better quality lighting and an increase in time spent watching TV. Setting the costs against the combined benefits of SHS suggests a positive payoff for this particular off-grid electricity option.
Experiential Marketing of Clean Drinking Water: Experimental Evidence for Kenya and Rwanda
[Revise & Resubmit from International Marketing Review]
with Rachel Howell and Kinsuk Mani Sinha
To date limited work investigates why and how consumers in emerging markets make consumption decisions. With the rise in demand for clean drinking water in sub-Sahara Africa, a field experiment was conducted on non-consumers of two socially oriented drinking water companies providing low cost re-usable bottled drinking water in Kenya and Rwanda. Non-consumers were randomly divided into two groups to address whether the provision of purchase-related information and exposure to a physical experience (free sample) increase purchase. For both countries, information motivated purchase (49% for Kenya, 67% for Rwanda) but purchase was even higher among those who received the free sample (67% for Kenya, 78% for Rwanda, p-value<5%). Similarly, planned future purchase and the purchase frequency were significantly increased in the treatment group. The results suggest that similar to consumers in developed markets, emerging market consumers may not only consume on the basis of price, but rather having an experience with a product can minimize purchase risk.
Determinants of Intended Return Migration among Refugees: A Comparison of Syrian Refugees in Germany and Turkeys
with Nawras Al Husein
This study assesses whether Syrian refugees intend to return to Syria, taking account of the economic, cultural and institutional differences between their country of origin and the host country. We develop a simple theoretical model on return migration and optimal duration of stay in the host country to identify the potential trade-offs faced by refugees. We then assess the theoretical predictions empirically with a sample of 577 Syrian refugees living in Turkey and Germany. Three return scenarios are considered: (i) ever returning, (ii) returning when it is as safe in Syria as before the war, and (iii) returning within two years. Refugees in the immediately neighbouring country of Turkey are more likely to regard their stay as temporary (76%) compared to those who fled to geographically more distant Germany (55%, p-value of difference=0.000). Concerning the correlates of intended return, we observe that socio-demographic and economic characteristics tend to have limited predictive power for re-migration intentions, independent of the host country. Similarly, while refugees value freedom of speech and belief, the existence of these liberties does not feed into the return migration decision in either of the host countries. Thus, attempts to impose these values on the Assad Government is unlikely to trigger mass return movement. Moreover, theory predicts that over time return migration becomes more likely; however, we find support for this only in the re-migration scenario that suggests return to Syria when the country is as safe as before the war. From a policy perspective, we analyse whether random exposure to positive or negative information regarding return migration impacts on the refugees’ intentions. We find no systematic impact on the decision to migrate back. This demonstrates that host governments cannot expect (rapid) information disseminated by refugee agencies – even if it provides support – to impact the refugees’ decision making about return. Overall, the analysis suggests that neither proximate nor distant host countries should bank on the speedy return of the Syrian refugees but should focus on refugee integration, independently of how long they intend to stay.
Shedding light on the shadows of informality: A meta-analysis of formalization interventions targeted at informal firms
[Revise & Resubmit from Labour Economics]
with Andrea Floridi and Binyam A. Demena
Governments and policy-makers promote formalization through various interventions ranging from simplifying registration procedures to increasing enforcement of the law. But despite various efforts, not much is known about the effects of interventions aiming at formalizing informal firms. This meta-analysis examines the empirical literature on the impact of such formalization interventions. We systematically assessed the literature on the impact of formalization policies resulting in 568 observations from 18 studies conducted by 33 researchers and published until June 2018. We analyzed the meta-impact of (i) cost, (ii) benefit and (iii) enforcement policy interventions and assessed whether the resulting outcomes are influenced by the type of data, econometric approach, and specification as well as publication bias. The findings suggest that policies increasing the benefits after formalization are associated with the highest formalization rates. Yet, the overall impact of the studied policy interventions remains weak when we control for publication quality and method heterogeneity. Overall, we only find modest evidence for increased formalization associated with the so far implemented interventions suggesting that further piloting and experimenting is needed to achieve large-scale formalization of the informal economy.
The impact of off-grid solar home systems in Kenya on energy consumption and expenditures
[Revise & Resubmit from World Development]
with Matthias Rieger, Arjun S. Bedi, Jurgen Vermeulen and Binyam A. Demena
This paper assesses the impact of solar home systems (SHS) on energy consumption and energy-related expenditures among Kenyan households. Based on a pipeline comparison approach of more than a thousand households, we find that access to a SHS leads to a net increase of 24 to 36 minutes in daily lighting use due to a three hour increase in the use of LED lamps, accompanied by a reduction in the use of “dirty” lamps. We also find a one litre reduction in the monthly use of kerosene for lighting. These changes in energy use along with a decline in the cost of charging mobile phones leads to a reduction in overall monthly expenditure of KSh 193 (about EUR 1.60). For the most popular SHS, these economic effects translate into a payback period of about six years. In addition to the economic benefits, we find small positive environmental effects, increased satisfaction from better quality lighting and an increase in time spent watching TV. Setting the costs against the combined benefits of SHS suggests a positive payoff for this particular off-grid electricity option.
Experiential Marketing of Clean Drinking Water: Experimental Evidence for Kenya and Rwanda
[Revise & Resubmit from International Marketing Review]
with Rachel Howell and Kinsuk Mani Sinha
To date limited work investigates why and how consumers in emerging markets make consumption decisions. With the rise in demand for clean drinking water in sub-Sahara Africa, a field experiment was conducted on non-consumers of two socially oriented drinking water companies providing low cost re-usable bottled drinking water in Kenya and Rwanda. Non-consumers were randomly divided into two groups to address whether the provision of purchase-related information and exposure to a physical experience (free sample) increase purchase. For both countries, information motivated purchase (49% for Kenya, 67% for Rwanda) but purchase was even higher among those who received the free sample (67% for Kenya, 78% for Rwanda, p-value<5%). Similarly, planned future purchase and the purchase frequency were significantly increased in the treatment group. The results suggest that similar to consumers in developed markets, emerging market consumers may not only consume on the basis of price, but rather having an experience with a product can minimize purchase risk.
Determinants of Intended Return Migration among Refugees: A Comparison of Syrian Refugees in Germany and Turkeys
with Nawras Al Husein
This study assesses whether Syrian refugees intend to return to Syria, taking account of the economic, cultural and institutional differences between their country of origin and the host country. We develop a simple theoretical model on return migration and optimal duration of stay in the host country to identify the potential trade-offs faced by refugees. We then assess the theoretical predictions empirically with a sample of 577 Syrian refugees living in Turkey and Germany. Three return scenarios are considered: (i) ever returning, (ii) returning when it is as safe in Syria as before the war, and (iii) returning within two years. Refugees in the immediately neighbouring country of Turkey are more likely to regard their stay as temporary (76%) compared to those who fled to geographically more distant Germany (55%, p-value of difference=0.000). Concerning the correlates of intended return, we observe that socio-demographic and economic characteristics tend to have limited predictive power for re-migration intentions, independent of the host country. Similarly, while refugees value freedom of speech and belief, the existence of these liberties does not feed into the return migration decision in either of the host countries. Thus, attempts to impose these values on the Assad Government is unlikely to trigger mass return movement. Moreover, theory predicts that over time return migration becomes more likely; however, we find support for this only in the re-migration scenario that suggests return to Syria when the country is as safe as before the war. From a policy perspective, we analyse whether random exposure to positive or negative information regarding return migration impacts on the refugees’ intentions. We find no systematic impact on the decision to migrate back. This demonstrates that host governments cannot expect (rapid) information disseminated by refugee agencies – even if it provides support – to impact the refugees’ decision making about return. Overall, the analysis suggests that neither proximate nor distant host countries should bank on the speedy return of the Syrian refugees but should focus on refugee integration, independently of how long they intend to stay.
