Behavioral factors and determinants of formalization: an informative experiment on the Simplified Regime for Small Businesses (RESIMPLE) in Paraguay.

Last registered on December 26, 2025

Pre-Trial

General Information

Title

RCT ID

AEARCTR-0017463

Initial registration date

December 13, 2025

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published

December 26, 2025, 2:21 AM EST

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

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Primary Investigator

Name

José Molinas Vega

Affiliation

Instituto Desarrollo

Contact Primary Investigator

Other Primary Investigator(s)

PI Name

Claudio Cappello Irrázabal

PI Affiliation

Instituto Desarrollo

PI Name

Marcos Martinez Sugastti

PI Affiliation

Instituto Desarrollo

Additional Trial Information

Status

In development

Start date

2025-05-12

End date

2026-12-15

Keywords

Behavior, Labor

Additional Keywords

Informal employment, tax compliance

JEL code(s)

Secondary IDs

Prior work

This trial does not extend or rely on any prior RCTs.

Abstract

The Paraguayan economy has a high level of labor and business informality, which is one of the main challenges for the country's productive and fiscal development. According to recent estimates by the Permanent Household Survey (EPH), approximately 65% of workers work in the informal sector, without access to social security or compliance with tax obligations. This situation limits collection, reduces labor protection, and makes it difficult to consolidate an equitable tax system.

In response to this challenge, the Paraguayan State, through the Dirección Nacional de Ingresos Tributarios (DNIT), implemented the Simplified Regime for Small Businesses (RESIMPLE), in order to facilitate the incorporation of microentrepreneurs into the formal system through simplified procedures and reduced payments. However, the adoption of the regime remains limited, suggesting that the barriers to formalization are not only economic or administrative, but also behavioral and perceptual.

This study seeks to provide experimental evidence on the behavioral factors that influence the decision to formalize, within the framework of the IDB's call "Understanding the Informal Economy and Associated Behaviors in Economic Agents". Through the application of behavioral economics tools, the project will evaluate how different framing—administrative, economic, and social—affect the willingness of informal workers to register with RESIMPLE.

This evidence will allow us to understand the cognitive and social determinants of informality, and will contribute to the design of evidence-based communication strategies and public policies that strengthen fiscal and productive inclusion. Likewise, the study represents an opportunity to articulate efforts between the DNIT and the Development Institute, integrating applied research and public policy for the benefit of the country's economic development.

External Link(s)

Registration Citation

Citation

Cappello Irrázabal, Claudio, Marcos Martinez Sugastti and José Molinas Vega. 2025. "Behavioral factors and determinants of formalization: an informative experiment on the Simplified Regime for Small Businesses (RESIMPLE) in Paraguay. ." AEA RCT Registry. December 26. https://doi.org/10.1257/rct.17463-1.0

Sponsors & Partners

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Experimental Details

Interventions

Intervention(s)

Intervention Start Date

2025-12-13

Intervention End Date

2026-01-30

Primary Outcomes

Primary Outcomes (end points)

1. Willingness / Intention to Formalize This primary variable measures the participant's self-reported probability of registering for the RESIMPLE regime following the informational intervention. It serves as the main indicator of the immediate effect of the framing and will be assessed through survey questions, specifically using a Likert scale to gauge the likelihood of registering in the upcoming months or a binary response regarding the specific intention to initiate the administrative process.

2. Behavioral Formalization Outcome This outcome represents the "gold standard" of the study by measuring the concrete action of formalization rather than just the intent. It is defined as a binary variable (1=Yes, 0=No) indicating whether the participant successfully initiated or completed their RESIMPLE registration within a specified follow-up period (e.g., 30 to 60 days post-intervention); in the context of this pilot, this measure also serves to test the feasibility of tracking administrative data.

Secondary Outcomes (Mediators)
1. Institutional Trust Defined as the individual's level of confidence in public institutions, specifically the DNIT and the tax system, this mediator explains the relationship between information and compliance. It will be measured using an index constructed from survey items that assess the participant’s perceptions of fairness, transparency, and the overall effectiveness of the tax authority.

2. Perceived Complexity This variable captures the individual's subjective assessment of the barriers associated with the formalization process, specifically how difficult, costly, or time-consuming they perceive the RESIMPLE registration to be. It will be evaluated using Likert-scale questions regarding the perceived ease of the administrative procedures and compliance requirements.

3. Self-Efficacy Self-efficacy is defined as the individual's belief in their own capability to successfully navigate and complete the formalization process. This mediator will be assessed through specific survey inquiries measuring the participant's confidence in their ability to handle the RESIMPLE registration independently without external assistance.

4. Perceived Social Norms This outcome measures the individual's perception of the social environment regarding formalization, acting as a proxy for the social framing hypothesis. It will be assessed by measuring both descriptive norms (the perceived prevalence of registered peers) and injunctive norms (the perceived level of community or family approval regarding the decision to formalize).

Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)

Secondary Outcomes (explanation)

Experimental Design

Type of study: The present study is a randomized control group experiment (RCT) with random assignment at the individual level, designed to identify the causal effect of different information frames on the willingness of informal workers in the construction sector to formalize within the RESIMPLE regime.

Target population: The population of interest is made up of informal workers in the construction and maintenance sector (masons, carpenters, electricians, painters, installers, among others) who are not registered with the DNIT or affiliated with the IPS.

The study will be implemented mainly in Asunción and cities in the Central department, with the possibility of extending it to rural communities to analyze territorial differences.

Experimental design and treatment groups

Participants will be randomly assigned to one of three experimental groups:

● Control Group (Administrative Information):
You will receive an informative video with basic explanations about the RESIMPLE regime, its requirements, the registration procedure and the amounts to be paid.

● Treatment 1 (Economic Benefits):
It will also receive administrative information, but with an additional framework that highlights the economic benefits of formalization, such as access to new markets, credit, stability, and protection from sanctions.

● Treatment 2 (Social Benefits or Social Norms):
You will receive administrative information, economic benefit information, and incorporate a social framing that emphasizes the collective benefits of formalization, the contribution to the common welfare, and the importance of following the social norm of "doing things right" as part of a progressing community.

Each participant will watch only one of the three videos, individually, without knowing the existence of other groups or versions.
Procedure

● The interviewer will introduce himself and inform the general objectives of the study.
● The eligibility criteria will be verified: not to be registered in DNIT or affiliated with the IPS, to work in the construction sector and to be between 18 and 65 years old.
● The interviewer will deliver the Informed Consent Letter for signature.
● The interviewer will make the random assignment and play the video corresponding to the assigned group.
● Then, the participant will complete a structured survey on socioeconomic aspects and perception of formalization.
● Finally, you can choose between two options:
● Receive a transfer of PYG 20,000, or
● Receive personalized assistance to formalize, including the first three months of contribution covered by the project, the printing and sending of a RESIMPLE receipt book and accompaniment to take care of it yourself after the first three months (this package is equivalent to PYG 200,000).

Experimental Design Details

Not available

Randomization Method

Computer-generated Block Randomization (on-device).

Randomization Unit

The unit of randomization is the individual. There is no cluster or group-level randomization.

Was the treatment clustered?