Female Entrepreneurship in the U.S. 1982 - 2012: Implications for Welfare and Aggregate Output

The number of women-owned businesses in the U.S. has soared over the last several decades, even compared to the rise in female labor market participation. In 1982 less than 9 percent of working women owned businesses, compared to over 17 percent of men. By 2012 more than 18 percent of women owned businesses while the analogous rate for men only slightly increased to almost 20 percent. This and other evidence suggests that women have faced significant barriers to starting and running businesses and these barriers have been declining over time. I examine the impact of these trends on aggregate output and the welfare of women and men in the labor force. Interpreted through the lens of a model of entrepreneurship, observed trends imply substantial declines in several barriers facing female entrepreneurs. Together, these changes account for over 12 percent of observed growth in aggregate output and a 2 percent increase in workers' consumption-equivalent welfare since 1982. By 2012, lower barriers increased the welfare of female entrepreneurs by a dramatic 33 percent, while lowering the welfare of male entrepreneurs by 6 percent. These impacts are in addition to any gains to workers from declining labor-market barriers.