Uganda

There is variation in the wages and profits that people earn in different locations, as evidenced by rural-urban wage gaps within low-income countries and income variation between commuting zones in higher income countries.

Tax audits are essential for governments to raise revenue but they can create economic distortions. To avoid the financial burden of an audit, firms may remain small, move to the informal sector, or shut down.

Observationally similar business owners earn vastly different profits across city locations within Kampala, Uganda.

Among the millions of entrepreneurs in developing economies, few are able to earn a decent livelihood. To help these entrepreneurs succeed, governmental and nongovernmental organizations invest billions of dollars every year in providing training programs.

Addressing firms’ misperceptions about the integrity of public entities boosts participation in Uganda’s public procurement. In contrast, addressing the lack of transparency alone fails to increase competition.

We study whether information frictions and corruption perceptions deter firms from doing business with the government.