Job creation and destruction in Rwanda’s formal sector: Evidence from administrative tax data

Working paper 4 Dec 2025 State Effectiveness

The paper shows that Rwanda’s formal economy has high, creation-led job flows of about 30 percent, which are shaped mainly by incumbent firms rather than by entry or exit. It also finds that smaller firms adjust more on the extensive margin while larger firms drive net gains, highlighting the need for policies that support small firm survival and encourage incumbent growth.