Preferences for Formalization in the Artisanal and Small-Scale Gold Mining Sector: Evidence from a Conjoint in Peru's Madre de Dios Province

Abstract

What induces artisanal and small-scale miners to formalize? The economics of informality frames this as a trade-off between the costs and benefits of registration, yet evidence on what works is inconclusive, and most of it concerns urban firms whose relationship with the state differs sharply from that of miners operating at its margins. We argue that an overlooked determinant is relational and psychological: how miners are perceived, and how they relate to a state that often criminalizes them. We test this with a conjoint experiment among 589 artisanal gold miners in Madre de Dios, Peru, varying seven policy attributes spanning the costs, benefits, and social image of formalization. Cost reductions and tax credits raise stated willingness to formalize, but the largest effect comes from a campaign recognizing formal miners as legitimate businesses exceeding every material incentive. Social standing, not economic incentives alone, drives formalization.