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Are Liquidity Constraints Holding Women Back? An Analysis of Gender in Self-Employment Earnings

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  • Rybczynski, Kate

Abstract

In Canada, the 1999 mean self-employment earnings for women is $22,995 compared with $38,350 for men (Devlin, 2001). The majority of this earnings gap is unexplained. In this paper, I investigate liquidity constraints as a potential determinant of the gender gap. Consistent with Hurst and Lusardi (2004) I find that the relationship between liquidity and self-employment is non-linear. Furthermore, the non-linearity is asymmetric across gender. In particular, women's earnings are affected at lower levels of liquidity. Using a baseline specification, I estimate that over 95 percent of the earnings gap would be eliminated in the absence of liquidity constraints.

Suggested Citation

  • Rybczynski, Kate, 2009. "Are Liquidity Constraints Holding Women Back? An Analysis of Gender in Self-Employment Earnings," The Journal of Economic Asymmetries, Elsevier, vol. 6(1), pages 141-165.
    • Handle: RePEc:eee:joecas:v:6:y:2009:i:1:p:141-165
    DOI: 10.1016/j.jeca.2009.01.010
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    References listed on IDEAS

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    1. Peter J. Kuhn & Herb J. Schuetze, 2001. "Self-employment dynamics and self-employment trends: a study of Canadian men and women, 1982-1998," Canadian Journal of Economics, Canadian Economics Association, vol. 34(3), pages 760-784, August.
    2. Holtz-Eakin, Douglas & Joulfaian, David & Rosen, Harvey S, 1994. "Sticking It Out: Entrepreneurial Survival and Liquidity Constraints," Journal of Political Economy, University of Chicago Press, vol. 102(1), pages 53-75, February.
    3. Blanchflower, David G & Oswald, Andrew J, 1998. "What Makes an Entrepreneur?," Journal of Labor Economics, University of Chicago Press, vol. 16(1), pages 26-60, January.
    4. Robert W. Fairlie & Alicia M. Robb, 2007. "Why Are Black-Owned Businesses Less Successful than White-Owned Businesses? The Role of Families, Inheritances, and Business Human Capital," Journal of Labor Economics, University of Chicago Press, vol. 25(2), pages 289-323.
    5. Hyslop, Dean R & Imbens, Guido W, 2001. "Bias from Classical and Other Forms of Measurement Error," Journal of Business & Economic Statistics, American Statistical Association, vol. 19(4), pages 475-481, October.
    6. Earle, John S. & Sakova, Zuzana, 2000. "Business start-ups or disguised unemployment? Evidence on the character of self-employment from transition economies," Labour Economics, Elsevier, vol. 7(5), pages 575-601, September.
    7. Cowling, Marc & Taylor, Mark, 2001. "Entrepreneurial Women and Men: Two Different Species?," Small Business Economics, Springer, vol. 16(3), pages 167-175, May.
    8. Evans, David S & Jovanovic, Boyan, 1989. "An Estimated Model of Entrepreneurial Choice under Liquidity Constraints," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 808-827, August.
    9. Lola Fabowale & Barbara Orser & Allan Riding, 1995. "Gender, Structural Factors, and Credit Terms between Canadian Small Businesses and Financial Institutions," Entrepreneurship Theory and Practice, , vol. 19(4), pages 41-65, July.
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    Cited by:

    1. Thorsten Konietzko, 2015. "Self-Employed Individuals, Time Use, and Earnings," Journal of Family and Economic Issues, Springer, vol. 36(1), pages 64-83, March.
    2. Lechmann, Daniel S. J. & Schnabel, Claus, 2012. "What Explains the Gender Earnings Gap in Self-Employment? A Decomposition Analysis with German Data," IZA Discussion Papers 6435, Institute of Labor Economics (IZA).
    3. Takanori Adachi & Takanori Hisada, 2017. "Gender differences in entrepreneurship and intrapreneurship: an empirical analysis," Small Business Economics, Springer, vol. 48(3), pages 447-486, March.
    4. Daniel Lechmann & Claus Schnabel, 2012. "Why is there a gender earnings gap in self-employment? A decomposition analysis with German data," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 1(1), pages 1-25, December.

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    More about this item

    Keywords

    J16; J23; Self-employment; Earnings; Gender differentials; Credit constraints;
    All these keywords.

    JEL classification:

    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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