Colombia is a country of small firms. The main idea behind this dissertation is that there are disincentives for these firms to use capital and skilled workers, affecting their productivity and also keeping them from growing and becoming formal. These disincentives modify the impact of policies to reduce business and labor informality, and to increase capital access in small firms. They also impact social policy, since the poor and vulnerable workers are over-represented in small firms. The framework developed in this dissertation can be used in other developing countries with similar characteristics in tax schemes and credit access, even if information availability is limited at a firm level.
