Informality, Harassment, and Corruption : Evidence from Informal Enterprise Data from Harare, Zimbabwe

New representative survey data for Harare, Zimbabwe are used to analyze the conditions under which informal businesses encounter requests for bribes. A simple model develops basic expectations of bribe exposure: those with higher opportunity costs of formalizing and with a higher ability to pay (resources) are expected to face a higher bribe risk. Empirical results find that informal businesses operating out of necessity are likelier to have a bribe demanded of them. Robustness checks are performed to account for the endogeneity of the main regressors, through a bivariate probit specification, using an instrumental variable of whether an informal business owner started in the area of activity before the country's 2009 dollarization. Limited significant results are found for the effect of revenues (ability to pay)