Regional income inequality: a link to women-owned businesses

We assess how women-owned and operated businesses relate to income inequality at the community level. Using U.S. county-level data within the framework of modeling uncertainty, we employ a spatial Bayesian model averaging approach to identify which specific control variables are most consistent with the underlying data generating process for inequality. We find that higher income inequality is linked to larger shares of women-owned and managed businesses. These results are consistent with women-owned businesses being more prevalent at the extremes of the household income distribution where some women are pulled into business ownership at the lower end of the income distribution spectrum and others are driven by opportunities at the higher end of the distribution. We also found meaningful differences in the underlying control variable across our three measures of income inequality. Only a handful of control variables, such as the unemployment rate, rates of college education, and housing costs, are consistent predictors of income inequality.