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Does Gender Matter for Small Business Performance? Experimental Evidence from India

Delecourt, Solène, and Ng, Odyssa. “Does Gender Matter for Small Business Performance? Experimental Evidence from India.” Published by authors as a working paper( November 2019).

Abstract

Many well-known studies have shown that female-owned micro-enterprises are less profitable and have lower returns to capital than their male counterparts. This raises an important question: what drives the estimated gender gap in business performance? We examine this question in the context of vegetable sellers in Jaipur, India, a context where observationally women make less than men. We conduct two field experiments that keep every business aspect the same except for the gender of the owner, business aspects such as location, goods supplied, and hours of operation. In Experiment 1, we isolate demand-side constraints by training confederate sellers to sell packaged goods at fixed prices using a standardized script, thereby additionally controlling for seller behavior. In Experiment 2, we only control for supply-side characteristics. In both experiments, we find that women earn at least as much as men. Our results demonstrate that the estimated gender earnings gap in this context is not due to differential demand- side constraints or seller behavior, but instead is likely driven by differences in access to capital.

Do buyers discriminate against female-owned businesses? Two field experiments

Solène Delecourt, O. Ng. (2019). “Do buyers discriminate against female-owned businesses? Two field experiments. ” Working Paper, Stanford University.

Abstract

Gender inequality manifests itself at every step of the entrepreneurial process. By the time a woman is running her business, multiple factors have already constrained her profitability. How much of the gender gap can be explained by buyer’s behavior in the marketplace as against supply-side differences? Buyers might behave differently based on 1) a seller’s gender or 2) differential business characteristics by gender. To address this problem of confounding, we ran two field experiments that hold constant business characteristics and vary the owner’s gender, thus separating supply from demand factors. Before our randomized experiments, we collected data in India showing that men earn 50% more than women, men’s inventory is 40% larger than women’s and buyers are more likely to buy from male sellers. We set up our own market stalls in three different markets, keeping hours worked, location, size and setup constant, and provided the same type, quantity, and quality of goods to 272 owners–regardless of gender. To further test for demand-side discrimination, we also set up two shops in a large vegetable market and recruited confederate sellers to sell packaged goods using a standardized script. Our results show that providing men and women with the same business closes the gender gap in profitability, ruling out buyer’s discrimination. Women can earn as much as men, if given equal opportunity to do so. This finding challenges existing conclusions about the causes of the gender gap in business ownership and performance. 

Female Entrepreneurs Who Succeed in Male-Dominated Sectors in Ethiopia

Alibhai, Salman; Buehren, Niklas; Papineni, Sreelakshmi. 2015. “Female Entrepreneurs Who Succeed in Male-Dominated Sectors in Ethiopia. ” Gender Innovation Lab Policy Brief;No. 12. World Bank, Washington, DC. © World Bank. 

Abstract

In developing countries, female entrepreneurs have low returns. Yet, the few women who cross over into traditionally male-dominated sectors double their profits. So why don’t more women cross over? When parents and husbands support them, women are more likely to cross over. When they lack information on the earnings potential in male-dominated sectors, they are less likely to. This suggests a path to promote women entrepreneurs crossing over. The challenges Ethiopian women face in getting jobs and earning income come from a range of sources. Women start from a more difficult situation than men –without easy access to finance, land, training, education and effective business networks. The share of women in Ethiopia without education is almost twice that of men, which in turn limits women entrepreneurs’ ability to grow their businesses. Reducing gender inequalities in education and the labor market could increase annual GDP growth in Ethiopia by around 1.9 percentage points.

The gender gap in firm productivity in Rwanda: Evidence from establishment and household enterprise data.

Munyegera, Ggombe Kasim, and Akampumuza Precious, 2018″ The Gender Gap In Firm Productivity In Rwanda: Evidence From Establishment And Household Enterprise Data,” WIDER Working Paper 2018/100 Helsinki: UNU-WIDER, 2018.

Abstract

Rwanda is one of the countries with the best strategies for women empowerment and gender equality in Africa and globally. Nonetheless, some inequalities exist especially in education attainment. This study investigates the gender gaps in business performance using nationally representative household survey and establishment census data. Ordinary Least Squares results indicate that female-owned business enterprises employ fewer workers and are less productive than male-owned counterparts.

How do female entrepreneurs perform? Evidence from three developing regions

Bardasi, E., Sabarwal, S. & Terrell, K. ” How do female entrepreneurs perform? Evidence from three developing regions. ” Small Bus Econ 37, 417 (2011).

Abstract

Using the World Bank Enterprise Survey data, we analyze performance gaps between male- and female-owned companies in three regions—Eastern Europe and Central Asia (ECA), Latin America (LA), and Sub-Saharan Africa (SSA). Among our findings are significant gender gaps between male- and female-owned companies in terms of firm size, but much smaller gaps in terms of firm efficiency and growth (except in LA). Part of the reason women run smaller firms is that they tend to concentrate in sectors in which firms are smaller and less efficient (in ECA and SSA). By contrast, we find no evidence of gender discrimination in access to formal finance in any of the three regions, although in ECA women are less likely than men to seek formal finance. Finally, while female entrepreneurs receive smaller loans than their male counterparts, the returns from each dollar they receive is no lower in terms of overall sales revenue.

Bridging the gap: decomposing sources of gender yield gaps in Uganda groundnut production

Johnny Mugisha, Christopher Sebatta, Kai Mausch, Elizabeth Ahikiriza, David Kalule Okello & Esther M. Njuguna (2019) Bridging the gap: Decomposing sources of gender yield gaps in Uganda groundnut production, Gender, Technology and Development, 23:1, 19-35.

Abstract

Female plot managers in Sub-Saharan Africa often realize significantly lower crop yields than their male counterparts. Even for legumes, which are often referred to as ‘women’s crops’, yields are significantly lower. This study investigated the underlying causes of this gender yield gap in groundnut production. The analysis is based on survey data from 228 farm households from two groundnut growing regions in Uganda. We used the Blinder-Oaxaca model to decompose factors that contribute to this yield gap. Results show 63% and 44% gender yield gaps for improved and local varieties, respectively, with female plot managers realizing less than their male counterparts. Improved groundnut seeds increase female plot manager’s yields but not the yields of male plot managers. Male advantage and female disadvantage combined account for more than 70% of the yield gap in both improved and local groundnut variety production and exceed pure productivity differences. Labor use differences between female and male plot managers and variety types explain the observed yield gap. Interventions and policies that increase women’s access to productive inputs including improved seed will significantly contribute to closing the yield gap, and thereby increase crop production, food security, as well as women’s incomes.

Bridging the Gender Gap: Identifying What Is Holding Self-employed Women Back in Ghana, Rwanda, Tanzania, and the Republic of Congo

Emily Nix, Elisa Gamberoni, Rachel Heath.Bridging the Gender Gap: Identifying What Is Holding Self-employed Women Back in Ghana, Rwanda, Tanzania, and the Republic of Congo, The World Bank Economic Review, Volume 30, Issue 3, October 2016, Pages 501-521.

Abstract

Quantile decomposition methods are used to study the determinants of the gender gap in self-employment earnings across the earnings distribution of four Sub-Saharan countries: the Republic of Congo, Ghana, Rwanda, and Tanzania. Techniques developed by Firpo, Fortin, and Lemieux (2007) are used to decompose the gap into a compositional effect (the part of the earnings gap that can be explained by observable factors) and a structural effect (the part of the gap that can be explained by returns to those factors, suggestive of discrimination) at various quantiles of the income distribution. While, in all countries and all points of the wage distribution, compositional effects help explain gender gaps in self-employment earnings, the majority of the wage gap is due to structural effects (with the exception of low-income earners in the Republic of Congo). Still, the relative importance of specific compositional factors and the specific contribution of structural factors varies across countries and at different points of the income distribution within countries. There is some evidence of a glass-ceiling effect in the Republic of Congo and Tanzania but not in Ghana and Rwanda. These results suggest that discrimination is influenced by local conditions and that there is no single model of earnings gaps that can explain gender gaps in earning in sub-Saharan Africa.

The Productivity Gaps of Female-Owned Firms: Evidence from Ethiopian Census Data

Dennis Essers, Kelbesa Megersa, Marco Sanfilippo.(2020) The Productivity Gaps of Female-Owned Firms: Evidence from Ethiopian Census Data, The University of Chicago Press Journals.

Abstract

This paper provides new empirical evidence on the relative productivity disadvantage of female-owned firms compared with male-owned firms in a developing country setting. We rely on a large panel of manufacturing firms based on an annual census run by the Central Statistical Agency of Ethiopia. Our preferred estimation shows a 12% difference in levels of total factor productivity between female- and male-owned firms. Drawing on novel quantile approaches to formally compare productivity distributions, we also dig deeper into some of the potential mechanisms underlying this gender-based firm productivity gap. Our findings suggest that various forces are at work. Most female-owned firms seem to concentrate in certain less productive subsectors, and only very few succeed in standing out. Moreover, lower productivity of female-owned firms is shown to relate to a combination of observed firm characteristics and unobserved structural factors that varies according to a firm’s position in the overall productivity distribution.

Mind The (Profit) Gap: Why Are Female Enterprise Owners Earning Less Than Men?

Hardy M., Kagy G. (2018).Mind The (Profit) Gap: Why Are Female Enterprise Owners Earning Less Than Men?AEA Papers and Proceedings, vol. 108, pp. 252–55

Abstract

We explore potential causes for the well-documented profit gap between male- and female-owned microenterprises in low-income countries. We use rich data from an ongoing field project in Ghana’s garment making sector, and our study sample consists of all garment making firms in a midsize district capital. Even within the same industry, male-owned firms earn nearly twice as much profit as female-owned firms. Furthermore, we find the large and persistent gender difference in profits cannot be explained by our extensive firm- and owner-level characteristics. We conclude that factors outside of individual firm or firm-owner characteristics are likely to be at play.

It’s Getting Crowded in Here: Experimental Evidence of Demand Constraints in the Gender Profit Gap

Morgan Hardy, Gisella Kagy. It’s Getting Crowded in Here: Experimental Evidence of Demand Constraints in the Gender Profit GapThe Economic Journal, Volume 130, Issue 631, October 2020, Pages 2272–2290.

Abstract

This article considers market-level contributors to the well-documented gender profit gap among micro-entrepreneurs. We combine data from a garment-making firm census and market research survey in Ghana, uncovering a gender gap in the market-size-to-firm ratio and observing disproportionate self-reports of ‘not enough customers’ from female owners. We develop a simple model and discuss implications of potential gender differences in demand constraints. As experimental corroboration, we show that female-owned firms expand production and experience profit increases in response to random demand shocks, while male-owned firms do not. Nationally representative data echoes our experimental findings, showing more crowding in female-dominated industries.

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