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...

Formalizing firms can potentially increase the tax base, expand safety and social protections for workers, create good jobs, and grow the economy. However, the costs and processes of formality may be too challenging for firms, particularly the smallest firms, to bear. Thus, informal firms may...