Informality and productivity of micro and small enterprises in morocco

Abstract

The purpose of this paper is twofold. First, it aims to study the impact of informality on the productivity of micro and small enterprises in Morocco. Second, it highlights the factors that drive the productivity of (MSEs). To do this, we adopt an empirical approach based on an instrumental variable model, using a database of MSEs. This dataset presents a representative sample of 3657 MSEs collected in 2003 by the Economic Research Forum (ERF). We identify informal MSEs based on their tax registration status. Thus, companies registered with the tax authorities are considered formal. Our results show that the higher the probability of operating informally, the lower the productivity of MSEs. This impact is subject to the effects of many factors that explain the characteristics of formal enterprises and the quality of the business environment.