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

Author

Listed:
  • Morgan Hardy
  • Gisella Kagy

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.

Suggested Citation

  • Morgan Hardy & Gisella Kagy, 2018. "Mind The (Profit) Gap: Why Are Female Enterprise Owners Earning Less Than Men?," AEA Papers and Proceedings, American Economic Association, vol. 108, pages 252-255, May.
    • Handle: RePEc:aea:apandp:v:108:y:2018:p:252-55
    Note: DOI: 10.1257/pandp.20181025
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    Citations

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    Cited by:

    1. Goldstein,Markus P. & Gonzalez Martinez,Paula Lorena & Papineni,Sreelakshmi & Wimpey,Joshua Seth, 2022. "Childcare, COVID-19 and Female Firm Exit : Impact of COVID-19 School Closure Policies onGlobal Gender Gaps in Business Outcomes," Policy Research Working Paper Series 10012, The World Bank.
    2. Lo Bue, Maria C. & Le, Tu Thi Ngoc & Santos Silva, Manuel & Sen, Kunal, 2022. "Gender and vulnerable employment in the developing world: Evidence from global microdata," World Development, Elsevier, vol. 159(C).
    3. Lang, M & Seither, J, 2022. "The Economics of Women s Entrepreneurship: Evidence from Building Skills in Uganda," Documentos de Trabajo 20563, Universidad del Rosario.
    4. Jesica Torres & Franklin Maduko & Isis Gaddis & Leonardo Iacovone & Kathleen Beegle, 2023. "The Impact of the COVID-19 Pandemic on Women-Led Businesses," The World Bank Research Observer, World Bank, vol. 38(1), pages 36-72.
    5. Catia Batista & Sandra Sequeira & Pedro C. Vicente, 2022. "Closing the Gender Profit Gap?," Management Science, INFORMS, vol. 68(12), pages 8553-8567, December.
    6. Shreya Biswas, 2021. "She Innovates- Female owner and firm innovation in India," Papers 2109.09515, arXiv.org.
    7. Ranasinghe, Ashantha, 2024. "Misallocation across establishment gender," Journal of Comparative Economics, Elsevier, vol. 52(1), pages 183-206.
    8. Michael A. Clemens & Timothy N. Ogden, 2020. "Migration and household finances: How a different framing can improve thinking about migration," Development Policy Review, Overseas Development Institute, vol. 38(1), pages 3-27, January.
    9. Islam, Asif M. & Amin, Mohammad, 2023. "The gender labor productivity gap across informal firms," World Development, Elsevier, vol. 167(C).
    10. Brooks, Wyatt & Donovan, Kevin & Johnson, Terence R. & Oluoch-Aridi, Jackline, 2022. "Cash transfers as a response to COVID-19: Experimental evidence from Kenya," Journal of Development Economics, Elsevier, vol. 158(C).
    11. Ranasinghe, Ashantha, 2024. "Gender specific distortions, entrepreneurship and misallocation," Journal of Economic Dynamics and Control, Elsevier, vol. 162(C).
    12. Görg, Holger & Jäkel, Ina C., 2024. "Beyond Borders: Do Gender Norms and Institutions Affect Female Businesses?," IZA Discussion Papers 17123, Institute of Labor Economics (IZA).
    13. Joan Martinez, 2022. "The Long-Term Effects of Teachers' Gender Stereotypes," Papers 2212.08220, arXiv.org, revised Jul 2023.
    14. Nava Ashraf & Alexia Delfino & Edward L. Glaeser, 2019. "Rule of Law and Female Entrepreneurship," NBER Working Papers 26366, National Bureau of Economic Research, Inc.
    15. Kehinde F. Ajayi & Nana Akua Anyidoho, 2022. "Self‐employment preferences among university graduates in Ghana: Does gender make a difference?," Development Policy Review, Overseas Development Institute, vol. 40(2), March.
    16. Görg, Holger & Jäkel, Ina Charlotte, 2024. "Beyond borders: Do gender norms and institutions affect female businesses?," Kiel Working Papers 2273, Kiel Institute for the World Economy (IfW Kiel).
    17. Tchapo Gbandi & Ayira Korem & Kossiwa Zinsou-Klassou, 2024. "Save women entrepreneurs: gender, cultural context, and micro-commerce performance in Togo," Small Business Economics, Springer, vol. 62(3), pages 1099-1133, March.

    More about this item

    JEL classification:

    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • L67 - Industrial Organization - - Industry Studies: Manufacturing - - - Other Consumer Nondurables: Clothing, Textiles, Shoes, and Leather Goods; Household Goods; Sports Equipment
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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