Coherent Identifier About this item: 20.500.12592/v51rj3

Deconstructing the Missing Middle : Informality and Growth of Firms in Sub-Saharan Africa (English)

16 November 2022

Summary

This paper characterizes the firm size distribution by exploiting establishment-level censuses covering both formal and informal firms in Sub-Saharan Africa. The paper finds a "missing middle" in the employment-based size distribution of firms in four Sub-Saharan African countries. This "missing middle" hinges on the inclusion of informal firms, and it is not explained by state- or foreign-owned firms at the top of the size distribution, nor does it emerge from the size distribution of entrants. The paper reconciles these empirical results with a model of firm dynamics with endogenous informality and shows that calibrated values of entry barriers and productivity-dependent idiosyncratic distortions generate a "missing middle" that is consistent with its underlying drivers in the data.

Creators/Authors

Tags

africa productivity and growth economic growth informal sector other world firm innovation

Disclosure Date
2022/11/16
Disclosure Status
Disclosed
Doc Name
Deconstructing the Missing Middle : Informality and Growth of Firms in Sub-Saharan Africa
Originating Unit
Off of Sr VP Dev Econ/Chief Econ (DECVP)
Product Line
Advisory Services & Analytics
Rel Proj ID
1W-Firm Dynamics And Productivity: Data, Analysis, And Disseminati -- P175726
Series Name
Policy Research working paper ; no. WPS 10233;
TF No/Name
TF0B5367-COVID-19, Firms and Trade,TF0B7234-Re-examining the “missing middle hypothesis using firm level data
Unit Owning
EFI-FCI-TIC-Investment Climate (ETIIC),EFI-AFR1-MTI-MacroFiscal-2 (EAEM2),DECRG: Macroeconomics & Growth (DECMG),Enterprise Analysis-WB (DECEA)
Version Type
Final
Volume No
1

Topics