Published on February 19, 2026 – Updated on February 19, 2026
Location

Pôle Tertiaire - Site La Rotonde - 26 avenue Léon Blum - 63000 Clermont-Ferrand
Room 212

Research Seminar. Targetting efficient informal firms in developing countries


Magloire Seshie
CERDI, Université Clermont Auvergne
Sciences Po Reims

Abstract

In many developing economies, the informal sector constitutes a dominant share of enterprise activity and employment. While much of the existing literature has focused on measures of labor productivity within informal enterprises, this study examines the heterogeneity of informal firms in terms of economic efficiency, where efficiency is defined as a firm’s ability to allocate its resources optimally relative to the best attainable practice within a given technological environment. Using data on informal firms from the World Bank Enterprise Surveys, a stochastic frontier analysis is conducted to identify efficient firms, analyze their characteristics, and determine the factors associated with inefficiency. The distribution of efficiency scores across economic sectors is then examined to better understand sector-specific patterns. The findings of this study could help policymakers identify efficient informal firms and design appropriate programs to support their growth, promote job creation, and enhance their contribution to GDP.