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Household Matters: Revisiting the Returns to Capital among Female Microentrepreneurs

Bernhardt, Arielle, Erica Field, Rohini Pande, and Natalia Rigol. (2019) “Household Matters: Revisiting the Returns to Capital among Female Microentrepreneurs.” American Economic Review: Insights, 1 (2): 141-60.

Abstract

Multiple field experiments report positive financial returns to capital shocks for male and not female microentrepreneurs. But these analyses overlook the fact that female entrepreneurs often reside with male entrepreneurs. Using data from experiments in India, Sri Lanka, and Ghana, we show that the observed gender gap in microenterprise responses does not reflect lower returns on investment, when measured at the household level. Instead, the absence of a profit response among female-run enterprises reflects the fact that women’s capital is typically invested into their husband’s enterprise. We cannot reject equivalence of household-level income gains for male and female capital shock recipients.

Competing priorities: Women’s microenterprises and household relationships

Sophia Friedson-Ridenour, Rachael S. Pierotti. Competing priorities: Women’s microenterprises and household relationships, World Development Volume 121, 2019, Pages 53-62.

Abstract

Recent studies have suggested that women’s business decisions are influenced by members of their household, especially their spouse, and that these intrahousehold dynamics contribute to gender gaps in entrepreneurship outcomes. This in-depth qualitative study among micro-entrepreneurs in urban Ghana sought to understand the connections between women’s businesses and their households’ management of economic resources. The findings show that women’s business decisions are influenced by: 1) a desire to reinforce their partner’s responsibilities as a primary provider; 2) attempts to fulfil normative expectations of meeting the daily basic-needs of the family; and 3) a need to prepare for long-term security. To reinforce their husband’s responsibilities as a provider, women hid income and savings, and sometimes explicitly limited business growth. To ensure their ability to smooth household consumption and respond to emergencies, women prioritized savings over business investment. And, to plan for their long-term security, women opted for cautious business investment, instead maintaining pressure on their partner to meet current needs and investing in children and property for the future. Previous studies document gender differences in microenterprise business management. This research builds on those studies by examining how intrahousehold inequalities affect women’s business decisions. The findings demonstrate the contextual importance of social relations for understanding women’s business decisions. More broadly, the findings illustrate that interpersonal interactions concerning the management of economic resources are an integral part of how household members negotiate their rights and responsibilities in relation to each other.

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.

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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