Transactional Informality among Microenterprises in Mexico

The opacity with which firms do their transactions is perhaps one of the factors that may limit how much the productivity of microenterprises could increase. Based on a national survey carried out in Mexico, this paper examines the empirical validity of a prediction set derived from a theoretical model that analyzes the costs and benefits of being informal from a transactional point of view. The reason why they started the business, the ecosystem where they work, their expectations regarding local market growth, business size and the commercial networks in which they are engaged may explain why some firms are informal and others not.