Nudging Microentrepreneurs into Formalization in Brazil

Last registered on March 23, 2026
View Trial History

Pre-Trial

Trial Information

General Information

Title
Nudging Microentrepreneurs into Formalization in Brazil
RCT ID
AEARCTR-0018158
Initial registration date
March 17, 2026

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
March 23, 2026, 7:24 AM EDT

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

Locations

Country
Brazil
Region
Rio de Janeiro

Primary Investigator

Name
Anna-Katharina Lenz
Affiliation
Miami University
Contact Primary Investigator

Other Primary Investigator(s)

PI Name
Martin Valdivia
PI Affiliation
GRADE
Contact Investigator

Additional Trial Information

Status
Completed
Start date
2016-04-29
End date
2026-03-17
Keywords
Behavior, Crime, Violence, & Conflict, Firms & Productivity
Additional Keywords
microentrepreneurship
JEL code(s)
C93, D22, D91, L26, O12, O17
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract

This study examines whether behavioral barriers and local conditions shape informal microentrepreneurs’ decisions to formalize their businesses, and whether simple, low-cost interventions can help them do so. The study was conducted in Complexo Maré, a large favela area in Rio de Janeiro marked by poverty, territorial criminal control, and mobility restrictions. A total of 790 informal microentrepreneurs were enrolled and randomly assigned at the individual level, within neighborhoods, to one of four groups. One group received an in-person informational visit about the government’s subsidized formalization program for individual microentrepreneurs (MEI). A second group received weekly SMS messages about formalization over a period of 10 weeks. A third group received both the in-person informational visit and the weekly SMS reminders. A fourth group served as the control group and received neither intervention.

The in-person visits explained the business and social protection benefits of MEI, including easier business registration, the possibility of hiring one worker under simplified rules, and access to social security benefits. The visits also explained the steps and documents needed to register and encouraged entrepreneurs to complete the process with support from the local SEBRAE office. The SMS messages reinforced this information over time and reminded entrepreneurs about the opportunity to formalize and the availability of free assistance. Because the registration process in this study was tied to an in-person visit to the SEBRAE office, the study also takes into account that some entrepreneurs faced additional barriers linked to violence, territorial boundaries, and restricted mobility across neighborhoods.

The study examines whether these interventions affect business formalization, compliance with the formalization program, and longer-term business survival. It also examines whether the effects of the interventions depend on the surrounding institutional and security environment. Outcome data on formalization were assembled for 728 entrepreneurs, and follow-up survey data were collected for 701 entrepreneurs. The goal is to better understand why many informal business owners do not adopt potentially beneficial business practices, and how policies to support formalization can be designed to work more effectively in complex real-world settings.
External Link(s)

Registration Citation

Citation
Lenz, Anna-Katharina and Martin Valdivia. 2026. "Nudging Microentrepreneurs into Formalization in Brazil." AEA RCT Registry. March 23. https://doi.org/10.1257/rct.18158-1.0
Sponsors & Partners

Partner

Name
SEBRAE Rio de Janeiro
Type
none
URL
https://www.sebraerj.com.br/
Name
Redes da Mare
Type
ngo
URL
https://www.redesdamare.org.br/en
Experimental Details

Interventions

Intervention(s)
A total of 790 informal microentrepreneurs in Complexo Maré, Rio de Janeiro, were randomly allocated across four groups. The study was designed to test whether low-cost behavioral interventions could help entrepreneurs overcome behavioral barriers to formalization, especially limited attention, procrastination, and the difficulty of following through on a decision that has immediate costs but delayed benefits.

Treatment group one (i) received an in-person informational visit at their business, during which trained field staff explained the government’s subsidized MEI formalization program, including its business benefits, social protection benefits, registration requirements, and the availability of free assistance through the local SEBRAE office.

Treatment group two (ii) received weekly SMS messages over a period of 10 weeks. These messages gave information about MEI and reminded entrepreneurs about the opportunity to formalize, and encouraged follow-through.

Treatment group three (iii) received both the in-person informational visit and the 10 weekly SMS reminders, allowing us to test whether reminders were needed to overcome behavioral biases that impede take-up after an information session.

A fourth group served as the control group and received neither the informational visit nor the reminders.

The central idea of the intervention was that many entrepreneurs may already see value in formalization, but fail to act because of behavioral frictions; the text-message nudges were therefore designed to help them move from intention to action.
Intervention (Hidden)
Intervention Start Date
2016-04-29
Intervention End Date
2016-11-22

Primary Outcomes

Primary Outcomes (end points)
Here is a clean answer you can use:

The key outcome variables in this experiment are measures of business formalization and longer-term business performance. The primary outcomes are: (1) whether the entrepreneur formally registered the business through the MEI program after the intervention; (2) whether the entrepreneur both registered and remained compliant with the program’s required tax payments; and (3) whether the business remained in operation at longer-term follow-up.
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
In addition to the primary outcomes, the study examines intermediate outcomes related to the formalization process, including whether the entrepreneur contacted the local SEBRAE office, whether the entrepreneur knew about the existence and location of the SEBRAE office, whether the entrepreneur understood the benefits of the MEI program, and whether the entrepreneur reported thinking about formalizing the business. These outcomes allow us to study both whether the intervention changed final behavior and whether it first changed knowledge, perceptions, and intentions that could lead to formalization.
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
The study uses an individually randomized field experiment with four arms. Informal microentrepreneurs in Complexo Maré, Rio de Janeiro, were randomly allocated at the individual level, stratified by neighborhood, to one of four conditions: (1) an in-person informational visit about the MEI formalization program plus weekly SMS reminders for 10 weeks, (2) weekly SMS reminders only, (3) an in-person informational visit only, or (4) a control group that received neither intervention. This design allows the study to compare the effects of information alone, reminders alone, and the combined treatment against a no-treatment comparison group, and to test whether behavioral nudges in the form of reminders help entrepreneurs act on information they receive.
Experimental Design Details
Randomization Method
The randomization was conducted on the spot during the baseline survey using the Randomizer in Qualtrics Survey Software. After the enumerator entered the entrepreneur’s identifying information, the software automatically generated a random treatment number from one to four, assigning the participant to one of the three treatment groups or the control group.
Randomization Unit
The unit of randomization was the individual microentrepreneur.
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
The study included 790 informal microentrepreneurs at baseline.
Sample size: planned number of observations
The study included 790 informal microentrepreneurs at baseline.
Sample size (or number of clusters) by treatment arms
Treatment Group 1 (i): 207
Treatment Group 2 (ii): 201
Treatment Group 3 (iii): 203
Control Group: 179
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
Getulio Vargas Foundation Rio de Janeiro
IRB Approval Date
2016-03-01
IRB Approval Number
N/A
Analysis Plan

Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
No
Data Collection Complete
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials