# **2.1 Employers, own-account, and employees**

ILO offers exhaustive employment and employee statistics, based on nationally representative labor force surveys combined with household surveys and population censuses<sup>4</sup> . ILO data includes the number of employers, employees, and own-account workers by country and year. Specifically, employees who have an explicit or implicit contract of employment with an employer are distinguished from the self-employed, for which remuneration is directly tied to the profits from goods and services that they produce. The self-employed include employers, who continuously have engaged one or more persons to work for them in their business, and own-account workers, who do not employ other workers.

The number of employers, own-account and employees by country constitute the key statistics from which we estimate the number of firms per size and formality status. ILO reports two versions of these variables. First, ILOSTATS is a data repository with information from labor force and household surveys worldwide. The reporting of employment information is harmonized to allow country comparison, however data gaps remain. Not all countries produce labor or household surveys regularly. This creates space for the second version of employment data, stored in a second repository, ILOEST (ILO, 2023). ILOEST produces estimates of labor force variables using a series of cross-validated statistical models selected based on pseudo-out-of-sample comparisons. In some cases, models are country idiosyncratic.

According to ILO (2023), the initial modeling predicts country-level labor force participation rate using economic and demographic variables across nine estimation groups split based on economic and geographical proximity. Relevant to our setting, ILO further models the distribution of employment by status. In a similar procedure, first, the shares of each category (employer, employee, own account) are modeled against a set of country characteristics such as per capita income, economic structure, and model-specific variables such as the ”work for an employer” index from the Gallup World Poll. Second, the models estimate the evolution of these employment category shares based on the economic cycle and population demographics. The application of these shares on the estimated number of people employed gives the estimated number of individuals engaged in each employment category, which is the main input we use. Among other limitations of these data to estimate the number of businesses by country is that it does not provide information on firm characteristics, such as size distribution, which is available in firm-level establishment censuses and representative surveys.

# **2.2 Establishment censuses, economic censuses, and surveys**

Economic censuses are statistical surveys conducted on the full set of economic units belonging to a given population. In the US, the Economic Census serves as the statistical benchmark for current economic activity, feeding into the calculation of GDP and the Producer Price Index (PPI). The Census provides information on employment, payroll, revenue, sales, and industry classification. Economic censuses are also commonly used to update business registries.

> 4See table A1 in the Appendix for the underlying data sources used by ILO.

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