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The Inverted U-Shaped Relationship between Female Entrepreneurship and Economic Development

Author

Listed:
  • Nava Ashraf
  • Alexia Delfino
  • Edward L. Glaeser
  • Irene Solmone

Abstract

In the World Bank Enterprise Survey, the share of entrepreneurs who are women first rises and then falls with national income, while female labor force participation has the opposite U-shaped pattern. We present a model in which gender-based disadvantages, such as discrimination and household obligations, deter firm formation in poor countries and complex firm formation in rich countries. In middle-income countries, high returns to entrepreneurship offset gender-based costs, and firms remain simple. We document that female-owned firms are smaller and simpler. Larger firms are more productive. The female entrepreneurship rate is associated with female education, weak kinship ties, and Buddhism.

Suggested Citation

  • Nava Ashraf & Alexia Delfino & Edward L. Glaeser & Irene Solmone, 2025. "The Inverted U-Shaped Relationship between Female Entrepreneurship and Economic Development," AEA Papers and Proceedings, American Economic Association, vol. 115, pages 500-508, May.
    • Handle: RePEc:aea:apandp:v:115:y:2025:p:500-508
    DOI: 10.1257/pandp.20251070
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    More about this item

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • Z12 - Other Special Topics - - Cultural Economics - - - Religion

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