Written Threat Notification Enforcement ('Stick Treatment')

In Simple Words

Think of getting an official letter in the mail from traffic enforcement detailing a license plate number and stating the exact fine for an unpaid parking violation. Even without a police car parked outside, receiving a personalized warning letter sharply raises the driver's belief that violations are tracked and punished.

Bangladesh trial. A visit delivered the letter; it was not a letter-only test. Effects were small and concentrated in larger-revenue firms.

See source →Study conditions — New York Fed research summary ↗

Research question

Informal firms ignore baseline business registration laws because informal business owners perceive the likelihood of government detection and legal sanctions to be near zero.

Participants

Informal micro-enterprises in Bangladesh.

Study Design

Randomized Controlled Trial (RCT) evaluating official written notifications detailing registration duties and non-compliance penalties.

Results

Official written notifications warning of legal penalties significantly increased the proportion of targeted informal firms that completed formal registration.

Takeaway

Issue official, targeted written notifications to unregistered enterprises explicitly outlining legal registration mandates and non-compliance penalties.

Source and citation

See source →

André Mancha; Filipe Cavalcanti; Laísa Rachter; Livia Gouvêa; Luiz Felipe Fontes

Evidence in Labor Market Policies and Implications for Brazil: Informality

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Read alongside the research

Plain-English glossary

Original explanations, informed by the references below. Examples are illustrations, not data from the studies above. The research text stays unchanged.

Randomized controlled trial

A study that uses chance, like drawing lots, to decide who receives each option being compared. Researchers compare the groups’ outcomes to estimate the effect of those options.

ExampleA lottery assigns volunteers to a training programme or a comparison group. Researchers then compare their outcomes.

GET-IT glossary · Randomized study ↗Read more about randomized controlled trial →