The Determinants of Entrepreneurship Gender Gaps: A Cross-Country Analysis

Abstract

This paper uses aggregate data from the International Labor Organization and microeconomic data from the European Values Study to study the empirical determinants of gender gaps in entrepreneurship, distinguishing between gender gaps in employership and in self-employment. Our sample of 44 countries consists mostly of European countries but varies broadly in terms of income level and institutional background since it includes both Western European countries and former Communist countries. In the aggregate data we observe a gender gap in employers of 67% and a gender gap in self-employment of 48%. These gaps have slightly decreased in the 2000-2017 period although there are wide differences across countries. The two gaps are very highly correlated but their correlation with per capita GDP is weak. This is an important difference with respect to gender gaps in labor force participation, which tend to follow an inverse U-shape pattern when plotted against income per capita. Using the microeconomic data we find that the incidence of entrepreneurship among men is larger than among women, consistent with the gaps estimated using aggregate data. Our regressions show that these gaps are still sizeable even after controlling for a large set of control variables that include marital status, age, education, number of children, wealth, the participation of parents and spouse in entrepreneurship, values towards women, social capital, and the unemployment rate. Men benefit disproportionately from two of the key determinants in our model, the participation of parents and spouse in entrepreneurship, which have the largest magnitude of influence of selection into that occupation.