4.3 Survey Data on Firms: Share of Formality, by Sector

FIGURE 4.3 Survey Data on Firms: Share of Formality, by Sector

Source: based on ASi and NSS-umE data. Note: Panel a plots the average share of firms reporting that they pay the vAT in the ASi data as a function of firm size. The sample is divided into 20 bins of equal size. Each dot corresponds to 5 percent of the total observations. Survey sampling weights are used. The top 10 percent of firms are excluded from the panel. Panel b plots the formal market share in each sector among firms in the combined ASi and umE data. The definition of formality applied classifies a firm as formal if the firm reports in the ASi that it had paid the vAT; all other firms, including all firms in the umE, are classified as informal. Each observation is weighted using the firm’s total sales and survey sampling weight. ASi = Annual Survey of industries; NSS = National Sample Survey; umE = unorganized manufacturing Enterprises Survey; vAT = value added tax.