Female entrepreneurs managing from home

Gender roles demand that women devote more time to non-market labor such as childcare and household responsibilities. Therefore, the labor market hinders women’s ability to compete with their male counterparts, whose time is less subject to the demands of non-market work. The result is a performance gap between men and women. To obtain the flexibility to more efficiently perform both their market and non-market work, many women choose to be self-employed and operate their businesses from home. Using a large sample of US firms, we find that women who choose to operate their own businesses from home are able to narrow the performance gap between men and women entrepreneurs. Plain English Summary Women partially overcome societal disadvantages by running businesses from home. Women business owners achieve significant synergies by working from home that enable them to narrow the gap in performance relative to men. An analysis of over 600,000 small businesses reveals that there is a significant gap in performance between businesses run by men versus those run by women. Prior research shows that men enjoy structural advantages over women due to society’s demands on women’s time to perform household duties or provide childcare. We find that women are able to narrow the resulting performance gap by operating their businesses from home, providing them increased flexibility to manage their time. Our paper indicates that supporting women-owned businesses with policies that grant greater flexibility or more equitably or efficiently distribute household work can improve economic efficiency.