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Non-farm informal businesses comprise the majority of the firm distribution in developing countries. We document novel stylized facts about entry and exit of informal, non-farm firms using nationally representative panel data over 15 years and across regions with varying levels of local economic development in Vietnam. First, we find that informal businesses exhibit rates of entry and exit around 14–18% annually. Entry and exit rates are similar and highly correlated at a point in time, within industries, and within regions. They both decline over time and across space with economic development. Second, although market selection influences which firms survive, entry and exit have little net effect on aggregate (revenue) productivity or hiring of workers outside the household. This owes to overlapping labor productivity of entering and exiting firms and low subsequent productivity growth and hiring among the surviving entrants. Nonetheless, entry and exit are associated with large changes in individual income. Third, the large overlap in revenue of entering and exiting informal businesses and the high correlation between entry and exit rates are related to the education of owners and their economic activities before and after operating an informal business. Informal business owners are less educated on average than wage workers in the formal sector, but more educated than agricultural workers. The transitions in and out of operating an informal business reflect the underlying structure of economic activities of the working-age population, with education gaps also playing a role. The most common transition into non-farm businesses is to and from self-employment in agriculture. The likelihood of this transition declines with economic development, highlighting the role of net entry from agriculture into informal non-farm businesses in structural change. [ABSTRACT FROM AUTHOR]

Cities are complex regulatory environments. Attempts to regulate urban behavior create opportunities for politicians to manipulate enforcement to win votes and reward supporters. While some politicians choose not to enforce regulations, or forbearance, others undercut their intent, or dilution. Empirical research on enforcement has lagged behind due to the identification challenges in distinguishing weak state capacity from political manipulations. We develop a structured approach to process tracing that follows enforcement decisions sequentially across bureaucracies and specifies statistical distributions as counterfactuals to identify the causes of limited enforcement. We illustrate these strategies through original data on enforcement against squatters in urban Colombia and the provision of building permits in urban Turkey. Enforcement process tracing helps to document a form of distributive politics that is common to cities in the developing world. [ABSTRACT FROM AUTHOR]