Working Paper: NBER ID: w28486
Authors: Gaurav Chiplunkar; Pinelopi K. Goldberg
Abstract: We develop a framework for quantifying barriers to labor force participation (LFP) and entrepreneurship faced by women in India. We find substantial barriers to LFP, and higher costs of expanding businesses through the hiring of workers for women entrepreneurs. However, there is one area in which female entrepreneurs have an advantage: the hiring of female workers. We show that this is not driven by the sectoral composition of female employment. Consistent with this pattern, policies promoting female entrepreneurship can significantly increase female LFP even without explicitly targeting female LFP. Counterfactual simulations indicate that removing all excess barriers faced by women entrepreneurs would substantially increase the fraction of female-owned firms, female LFP, earnings, and generate substantial gains for the economy. These gains are due to higher LFP, higher real wages and profits, and reallocation: low productivity male-owned firms previously sheltered from female competition are replaced by higher productivity female-owned firms previously excluded from the economy.
Keywords: No keywords provided
JEL Codes: J16; J70; O17; O40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| barriers to female entrepreneurship (L26) | economic outcomes (F61) |
| higher costs for expanding businesses through hiring for women (J16) | lower female labor force participation (J21) |
| female entrepreneurs' comparative advantage in hiring female workers (J79) | increased employment of female workers in informal sector (J46) |
| constraints on business expansion (intensive margin) (D25) | higher fixed costs of formalization for women (D23) |
| removing gender-related barriers (J16) | doubling of female labor force participation (J21) |
| removing gender-related barriers (J16) | 3% increase in aggregate productivity (O49) |
| removing gender-related barriers (J16) | 43% increase in real income (J39) |