Abstract
We analyze the spatial determinants of female entrepreneurship in India in the manufacturing and services sectors. We focus on the presence of incumbent female-owned businesses and their role in promoting higher subsequent female entrepreneurship relative to male entrepreneurship. We find evidence of agglomeration economies in both sectors, where higher female ownership among incumbent businesses within a district-industry predicts that a greater share of subsequent entrepreneurs will be female. Moreover, higher female ownership of local businesses in related industries (e.g. those sharing similar labor needs and industries related via input–output markets) predict greater relative female entry rates even after controlling for the focal district-industry’s conditions. The core patterns hold when using local industrial conditions in 1994 to instrument for incumbent conditions in 2000 and 2005. The results highlight that the traits of business owners in incumbent industrial structures influence the types of entrepreneurs supported.
Highlights
A central driver of economic growth over the past century is the increased role of women
The micro-data are a representative sample of the Indian economy, and the establishment records identify the gender of the owner for proprietary establishments
We show that the poor access of female entrepreneurs to banking services that Rosenthal and Strange (2012) identify for the United States is present in India as well
Summary
A central driver of economic growth over the past century is the increased role of women. We can identify establishments that are new entrants From these micro-data, we develop relative rates of female entrepreneurship and business ownership at the district-industry-year level. Klepper (2010) shows in detail the importance of this spawning process in the history of Detroit and Silicon Valley, and many econometric studies find the existing business landscape the most important factor for the spatial location of new entrants (e.g., Glaeser and Kerr 2009, Figueiredo et al 2009) We model both the total employment in incumbent firms for the district-industry and the count of female-owned incumbent businesses . The outcome variable Female Entry%dit is the ratio of female-owned young establishments in the district-industry-year to the sum of female- and male-owned young establishments This measure utilizes sampling weights to yield population-level estimates. This provides some assurance for the instrumental variables results acting through the proposed industrial legacies rather than other channels
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