Assessing gender equity among businesses in Ethiopia: implications for gender profitability gap

Evidence shows that gender inequality characterizes the enterprise landscape in sub-Saharan Africa, with women disproportionately concentrating in low return businesses. With the literature leaning toward comparing male- and female-owned enterprises and among females in female- and male-dominated sectors, evidence of a gendered profit gap within male-dominated sectors is scanty and mixed. This study evaluated the gender profitability gap and identified drivers of female participation in male-dominated and high-return sectors using the Ethiopian Socioeconomic Survey 2018/19 dataset. The study did not find evidence of gender gap in profit both before and after controlling for other factors affecting enterprise profit. Our result shows that women with larger households, a longer duration of migration, and better assets are more likely to engage in male-dominated sectors, whereas those who are widowed/divorced/separated and have small children are less likely to engage in such sectors. Larger households and longer durations of migration are more likely to be associated with female engagement in high-return sectors, whereas home-based business is less likely. From this, females in male-dominated sectors tend to have better support systems and lower vulnerabilities. Thus, the findings of the study warrant interventions in access to information on business opportunities, workspace, and paid care services.This study examines gender disparities in profit for businesses within male-dominated sectors. Our findings show no significant gap between female- and male-owned firms, even in high-return sectors. This highlights the importance of equal opportunity for women entrepreneurs. These robust results support efforts towards gender equality and women’s empowerment in business.The study explores why women participate in male-dominated and high-return sectors. It finds that these sectors are not always interchangeable, and household factors like childcare heavily influence female participation. Importantly, the study highlights the role of family support systems and other female entrepreneurs in encouraging women to enter male-dominated sectors. This emphasizes the social and economic influences beyond just industry dominance that impact female entrepreneurship.By examining profitability gaps in male-dominated sectors and the factors influencing women’s participation in both these and high-return sectors, this study offers valuable insights for policymakers. It highlights the need for childcare support to ease women’s entry into male-dominated fields and proposes further research into alternative models for evaluating gender dynamics and business performance. Ultimately, the study paves the way for a more inclusive and equitable entrepreneurial landscape by providing evidence and direction for future initiatives.