# **Table 8: Mechanisms**

||Mean<br>[SD] in|Differ<br>an|ence betw<br>d Controlg|een [...]<br>roup||P-valu|e for differ|ence...|P-values of joint<br>test|
|---|---|---|---|---|---|---|---|---|---|
||Control|||||Group 1|<br>Group 1|Group 2|<br>group1=group2=|
||Group|Group1|Group2|Group3|N|and 2|and 3|and 3|group3=0|
|_Legal barriers to formalization_||||||||||
|Business owner has a passport or a Beninese|0.531|-0.028|0.027|0|2877|0.241|0.514|0.305|0.619|
|ID card|[0.499]|(0.042)|(0.027)|(0.024)||||||
|Business owner has a birth certificate|0.849|-0.029|0.024|-0.007|2877|0.116|0.473|0.104|0.317|
||[0.359]|(0.03)|(0.019)|(0.017)||||||
|Business owner has a LEPI card (electoral|0.736|-0.052|0.047**|0.025|2876|0.016**|0.037**|0.349|0.055*|
|card)|[0.441]|(0.037)|(0.023)|(0.02)||||||
|_Perceived costs and disadvantages of formalizati_|_on:_|||||||||
|It increases the amount of taxes to be paid/|0.295|0.052|0.005|0.016|2840|0.284|0.368|0.644|0.595|
|risk of tax inspection|[0.456]|(0.039)|(0.025)|(0.022)||||||
|High registration costs|0.235|-0.022|-0.024|-0.036*|2840|0.966|0.703|0.598|0.331|
||[0.424]|(0.035)|(0.022)|(0.02)||||||
|Registration process complicate or time|0.234|0.003|-0.023|0.006|2840|0.525|0.937|0.214|0.649|
|consuming|[0.424]|(0.037)|(0.023)|(0.02)||||||
|It involves more corruption|0.025|0.026**|-0.011|-0.005|2840|0.01**|0.019**|0.427|0.071*|
||[0.156]|(0.013)|(0.008)|(0.007)||||||
|Other answers|0.042|0.004|0.002|0.01|2840|0.918|0.732|0.47|0.785|
||[0.2]|(0.019)|(0.012)|(0.01)||||||
|Don’t think there are any disadvantages or|0.199|-0.002|0.043*|0.058***|2840|0.272|0.101|0.508|0.026**|
|costs|[0.399]|(0.037)|(0.023)|(0.021)||||||
|Don't know|0.236|-0.029|-0.027|-0.058***|2840|0.97|0.392|0.156|0.028**|
||[0.425]|(0.035)|(0.022)|(0.019)||||||
|_Perceived benefits and advantages of formalizati_|_on:_|||||||||
|It gives access to new markets or|0.352|-0.037|-0.011|0.011|2841|0.562|0.243|0.41|0.603|
|government/NGO's programs|[0.478]|(0.041)|(0.026)|(0.023)||||||
|Better reputation/social acceptance for the|0.307|-0.043|0.041|0.006|2841|0.062*|0.223|0.177|0.238|
|business|[0.462]|(0.04)|(0.025)|(0.023)||||||
|Being able to open a bank account/ It is|0.24|-0.004|0.061**|0.073***|2841|0.137|0.05*|0.632|0.004***|
|easier to get a loan|[0.428]|(0.039)|(0.025)|(0.022)||||||
|It reduces the risk of been ask for bribes/|0.146|-0.001|0.02|0.041**|2841|0.558|0.194|0.308|0.135|
|being fined /allow to operate more visibly|[0.354]|(0.032)|(0.02)|(0.018)||||||
|Other answers|0.042|0.039**|0.009|0.009|2841|0.177|0.128|0.974|0.24|
||[0.2]|(0.019)|(0.012)|(0.011)||||||
|Don’t think there are any advantages or|0.14|-0.008|0.018|0.008|2841|0.448|0.599|0.615|0.787|
|benefits|[0.347]|(0.03)|(0.019)|(0.017)||||||
|Don't know|0.225|0.003|-0.062***|-0.061***|2841|0.085*|0.059*|0.971|0.003***|
||[0.418]|(0.034)|(0.021)|(0.019)||||||

Notes: Sources: Survey Data. Column 1: Standard deviations presented in brackets. Columns 2-4: coefficients and standard errors (in parentheses) from an OLS regression of the outcome variable on treatment dummies, controlling for strata dummies (dummies for each triplet). ***, **, * indicate statistical significance at 1, 5 and 10%.