Formality of household businesses in Ho Chi Minh City: Approached from the logit model

Abstract

Household businesses constitute an important part of the private economic sector, contributing to economic development and job creation, especially in big cities like Ho Chi Minh City. Resulting from the existing policies, however, there are emerging issues that need discussing to find out appropriate solutions, particularly those related to the formality of household businesses. Based on the regression models using mainly data of the 2017 Economic Census, the article is aimed to detect and measure the factors affecting the formality of household businesses. This can be considered as the first study that has used the dataset of the 2017 Economic Census to run a logit model for this topic. Some new and important findings can be mentioned as follows: Household size (labour, turnover) is still a significant factor affecting the formality of household businesses, although it is not the only one. Another factor is the transparency (reflected by the difference between the turnover reported by the household and the figure estimated by interviewers), since the more a household business can conceal in the turnover declaration, the less it wants to formalise business activities