Written Threat Notification Enforcement ('Stick Treatment')
RCTReview
Informal firms ignore baseline business registration laws because informal business owners perceive the likelihood of government detection and legal sanctions to be near zero.
Picture this
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.
What the evidence says
Official written notifications warning of legal penalties significantly increased the proportion of targeted informal firms that completed formal registration.
- Who was studied
- Informal micro-enterprises in Bangladesh.
- How
- Randomized Controlled Trial (RCT) evaluating official written notifications detailing registration duties and non-compliance penalties.
What to do
Issue official, targeted written notifications to unregistered enterprises explicitly outlining legal registration mandates and non-compliance penalties.
From the source
"In Bangladesh, researchers randomized informal firms to receive a notification that they need to be registered and about the consequences of not concluding their registration with the competent authority. They found that this notification increased the proportion of registered firms"
JOI_Brazil_Evidence_in_Labor_Market_Policies_and_Implications_for.pdf