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It’S Getting Crowded in Here: Experimental Evidence of Demand Constraints in the Gender Profit Gap

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  • Morgan Hardy
  • Gisella Kagy

Abstract

This article considers market-level contributors to the well-documented gender profit gap among micro-entrepreneurs. We combine data from a garment-making firm census and market research survey in Ghana, uncovering a gender gap in the market-size-to-firm ratio and observing disproportionate self-reports of ‘not enough customers’ from female owners. We develop a simple model and discuss implications of potential gender differences in demand constraints. As experimental corroboration, we show that female-owned firms expand production and experience profit increases in response to random demand shocks, while male-owned firms do not. Nationally representative data echoes our experimental findings, showing more crowding in female-dominated industries.

Suggested Citation

  • Morgan Hardy & Gisella Kagy, 2020. "It’S Getting Crowded in Here: Experimental Evidence of Demand Constraints in the Gender Profit Gap," The Economic Journal, Royal Economic Society, vol. 130(631), pages 2272-2290.
    • Handle: RePEc:oup:econjl:v:130:y:2020:i:631:p:2272-2290.
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    File URL: http://hdl.handle.net/10.1093/ej/ueaa040
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    Cited by:

    1. Catia Batista & Sandra Sequeira & Pedro C. Vicente, 2022. "Closing the Gender Profit Gap?," Management Science, INFORMS, vol. 68(12), pages 8553-8567, December.
    2. 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.
    3. Merfeld, Joshua, 2021. "Misallocation and Agricultural Production: Evidence from India," 2021 Conference, August 17-31, 2021, Virtual 315914, International Association of Agricultural Economists.
    4. Merfeld, Joshua D., 2022. "Labor Elasticities, Market Failures, and Misallocation: Evidence from Indian Agriculture," 96th Annual Conference, April 4-6, 2022, K U Leuven, Belgium 321214, Agricultural Economics Society - AES.

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