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

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 &q...

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Bibliographic Details
Main Author: Abreha, Kaleb Girma (Author)
Format: Electronic eBook
Language:English
Published: Washington, D.C The World Bank 2022
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Online Access:Volltext
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
Physical Description:1 Online-Ressource (65 Seiten)
DOI:10.1596/1813-9450-10233