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Mind The (Profit) Gap: Why Are Female Enterprise Owners Earning Less Than Men?

Author

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  • Morgan Hardy
  • Gisella Kagy

Abstract

We explore potential causes for the well-documented profit gap between male- and female-owned microenterprises in low-income countries. We use rich data from an ongoing field project in Ghana's garment making sector, and our study sample consists of all garment making firms in a midsize district capital. Even within the same industry, male-owned firms earn nearly twice as much profit as female-owned firms. Furthermore, we find the large and persistent gender difference in profits cannot be explained by our extensive firm- and owner-level characteristics. We conclude that factors outside of individual firm or firm-owner characteristics are likely to be at play.

Suggested Citation

  • Morgan Hardy & Gisella Kagy, 2018. "Mind The (Profit) Gap: Why Are Female Enterprise Owners Earning Less Than Men?," AEA Papers and Proceedings, American Economic Association, vol. 108, pages 252-255, May.
    • Handle: RePEc:aea:apandp:v:108:y:2018:p:252-55
    Note: DOI: 10.1257/pandp.20181025
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    Citations

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    Cited by:

    1. Goldstein,Markus P. & Gonzalez Martinez,Paula Lorena & Papineni,Sreelakshmi & Wimpey,Joshua Seth, 2022. "Childcare, COVID-19 and Female Firm Exit : Impact of COVID-19 School Closure Policies onGlobal Gender Gaps in Business Outcomes," Policy Research Working Paper Series 10012, The World Bank.
    2. Lo Bue, Maria C. & Le, Tu Thi Ngoc & Santos Silva, Manuel & Sen, Kunal, 2022. "Gender and vulnerable employment in the developing world: Evidence from global microdata," World Development, Elsevier, vol. 159(C).
    3. Lang, M & Seither, J, 2022. "The Economics of Women s Entrepreneurship: Evidence from Building Skills in Uganda," Documentos de Trabajo 20563, Universidad del Rosario.
    4. Jesica Torres & Franklin Maduko & Isis Gaddis & Leonardo Iacovone & Kathleen Beegle, 2023. "The Impact of the COVID-19 Pandemic on Women-Led Businesses," The World Bank Research Observer, World Bank, vol. 38(1), pages 36-72.
    5. Catia Batista & Sandra Sequeira & Pedro C. Vicente, 2022. "Closing the Gender Profit Gap?," Management Science, INFORMS, vol. 68(12), pages 8553-8567, December.
    6. Shreya Biswas, 2021. "She Innovates- Female owner and firm innovation in India," Papers 2109.09515, arXiv.org.
    7. Ranasinghe, Ashantha, 2024. "Misallocation across establishment gender," Journal of Comparative Economics, Elsevier, vol. 52(1), pages 183-206.
    8. Michael A. Clemens & Timothy N. Ogden, 2020. "Migration and household finances: How a different framing can improve thinking about migration," Development Policy Review, Overseas Development Institute, vol. 38(1), pages 3-27, January.
    9. Islam, Asif M. & Amin, Mohammad, 2023. "The gender labor productivity gap across informal firms," World Development, Elsevier, vol. 167(C).
    10. Brooks, Wyatt & Donovan, Kevin & Johnson, Terence R. & Oluoch-Aridi, Jackline, 2022. "Cash transfers as a response to COVID-19: Experimental evidence from Kenya," Journal of Development Economics, Elsevier, vol. 158(C).
    11. Ranasinghe, Ashantha, 2023. "Gender Specific Distortions, Entrepreneurship and Misallocation," Working Papers 2023-1, University of Alberta, Department of Economics, revised 27 Jul 2023.
    12. Joan Martinez, 2022. "The Long-Term Effects of Teachers' Gender Stereotypes," Papers 2212.08220, arXiv.org, revised Jul 2023.
    13. Nava Ashraf & Alexia Delfino & Edward L. Glaeser, 2019. "Rule of Law and Female Entrepreneurship," NBER Working Papers 26366, National Bureau of Economic Research, Inc.
    14. Kehinde F. Ajayi & Nana Akua Anyidoho, 2022. "Self‐employment preferences among university graduates in Ghana: Does gender make a difference?," Development Policy Review, Overseas Development Institute, vol. 40(2), March.

    More about this item

    JEL classification:

    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • L67 - Industrial Organization - - Industry Studies: Manufacturing - - - Other Consumer Nondurables: Clothing, Textiles, Shoes, and Leather Goods; Household Goods; Sports Equipment
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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