Formalizing Employment in Africa’s Small Firms: Experimental Evidence from Côte d’Ivoire

Abstract Informal, low-quality employment in micro, small, and medium enterprises (MSMEs) remains a significant challenge in low- and middle-income countries. This study presents evidence from an impact evaluation of a light-touch business consulting program with a focus on employment formalization in Côte d’Ivoire. Using a randomized controlled trial with 448 self-selected MSMEs and a unique employer–employee dataset, it finds that the intervention led to employment formalization, driven by greater minimum wage compliance (12 percentage points (pp)) and an increase in written contract provision (7 pp). The intervention’s financial implications were moderate and the analysis shows suggestive evidence that these improvements were linked to selective formalization driven by employers’ cost-benefit calculation for individual workers. Findings indicate that firms may have partially formalized previously informal payment streams.

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Publication Details

Journal
The World Bank Economic Review
Published
2026-02-05
DOI
https://doi.org/10.1093/wber/lhag003
Primary Topic
Firm Innovation and Growth
Type
article
Field-Weighted Citation Impact
0.00

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article

Formalizing Employment in Africa’s Small Firms: Experimental Evidence from Côte d’Ivoire

Jan Priebe, Jann Lay, Tabea Lakemann, Bernd Beber et al.
The World Bank Economic Review
Firm Innovation and Growth
article

Formalizing Employment in Africa’s Small Firms: Experimental Evidence from Côte d’Ivoire

Jan Priebe, Jann Lay, Tabea Lakemann, Bernd Beber, Katharina Fietz
article en

Abstract

Abstract Informal, low-quality employment in micro, small, and medium enterprises (MSMEs) remains a significant challenge in low- and middle-income countries. This study presents evidence from an impact evaluation of a light-touch business consulting program with a focus on employment formalization in Côte d’Ivoire. Using a randomized controlled trial with 448 self-selected MSMEs and a unique employer–employee dataset, it finds that the intervention led to employment formalization, driven by greater minimum wage compliance (12 percentage points (pp)) and an increase in written contract provision (7 pp). The intervention’s financial implications were moderate and the analysis shows suggestive evidence that these improvements were linked to selective formalization driven by employers’ cost-benefit calculation for individual workers. Findings indicate that firms may have partially formalized previously informal payment streams.

The World Bank Economic Review
RWI – Leibniz Institute for Economic Research (DE), German Institute for Global and Area Studies (DE), University of Mannheim (DE), WZB Berlin Social Science Center (DE), Hamburg Institute for Therapy Research (DE), University of Göttingen (DE), Bernhard Nocht Institute for Tropical Medicine (DE)
Bundesministerium für Wirtschaftliche Zusammenarbeit und Entwicklung
Openalex Percentile: Top 100%
Firm Innovation and Growth
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