Suresh De Mel

University of Peradeniya

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NBER Working Papers and Publications

December 2016Labor Drops: Experimental Evidence on the Return to Additional Labor in Microenterprises
with David McKenzie, Christopher Woodruff: w23005
The majority of enterprises in developing countries have no paid workers. Is this optimal, or the result of frictions in labor markets? We conduct an experiment providing wage subsidies to randomly chosen microenterprises in Sri Lanka. In the presence of frictions, a short-term subsidy could have a lasting impact on employment. We find the subsidy induced firms to hire, but there was no lasting impact on employment, profitability, or sales. Analysis rules out several theoretical mechanisms that could result in sub-optimally low employment. We conclude that labor market frictions are not the reason own-account workers do not become employers.
December 2014What are the Headwaters of Formal Savings? Experimental Evidence from Sri Lanka
with Michael Callen, Craig McIntosh, Christopher Woodruff: w20736
When households increase their deposits in formal bank savings accounts, what is the source of the money? We combine high-frequency surveys with an experiment in which a Sri Lankan bank used mobile Point-of-Service (POS) terminals to collect deposits directly from households each week. In this context, the headwaters of formal savings are to be found in sacrificed leisure time: households work more, and work more on the wage market when savings options improve. These results suggest that the labor allocation channel is an important mechanism linking savings opportunities to income.
April 2012The demand for, and consequences of, formalization among informal firms in Sri Lanka
with David McKenzie, Christopher Woodruff: w18019
We conduct a field experiment in Sri Lanka providing informal firms incentives to formalize. Information about the registration process and reimbursement of direct costs has no effect. Payments equivalent to one-half to one month (alternatively, 2 months) of the median firm's profits leads to registration of around one-fifth (alternatively, one-half) of firms. Land ownership issues are the most common reason for not registering. Follow-up surveys 15 to 31 months later show higher mean profits, but largely in a few firms which grew rapidly. We find little evidence for other changes in behavior, but formalized firms express more trust in the state.

Published: Suresh de Mel & David McKenzie & Christopher Woodruff, 2013. "The Demand for, and Consequences of, Formalization among Informal Firms in Sri Lanka," American Economic Journal: Applied Economics, American Economic Association, vol. 5(2), pages 122-50, April. citation courtesy of

May 2010Who are the Microenterprise Owners? Evidence from Sri Lanka on Tokman versus De Soto
with David McKenzie, Christopher Woodruff
in International Differences in Entrepreneurship, Josh Lerner and Antoinette Schoar, editors
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