Using firm-level survey data for a large cross section of countries, the paper assesses the gap in labor productivity between formal and informal firms in developing countries for which comparable data are available. It also investigates the impact of competition from informal firms on the labor...

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...