The Gender Labor Productivity Gap across Informal Firms

This study uncovers a gender labor productivity gap among informal firms in 14 developingeconomies. The results show that labor productivity is approximately 15.2 percent (or 0.165 log point) lower amongwomen-owned than men-owned informal firms. Decomposition techniques reveal several factors that contribute to lowerlabor productivity of women-owned informal firms relative to men-owned informal firms. These include lower education,lower experience, lower capitalization, and less protection from crime among women owners than men owners of informalfirms. However, the smaller size of the women-owned firms and their greater return from producing or selling undercontract and from security payments narrows the productivity gap. The results provide several specific and general policyrecommendations for improving the labor productivity of women-owned informal firms and closing the gap withmale-owned informal firms. For one, a substantial amount of the productivity gap can be closed by providing moreresources to women such as education, managerial experience, and physical capital. The study also provides somepreliminary results on another important policy objective —the costs and benefits of formalization as perceived bywomen-owned versus men-owned informal firms.