Gender Differences in Informal Labor-Market Resilience

This paper reports on the universe of garment-making-firm owners in a Ghanaian district capital during the COVID-19 crisis. By July 2020, 80 percent of both male- and female-owned firms were operational. However, pre-pandemic data show that selection into persistent closure differs by gender. Consistent with a “cleansing effect” of recessions and highlighting the presence of marginal female entrepreneurs, female-owned firms that remain closed past the spring lockdown are negatively selected on pre-pandemic sales. The pre-pandemic sales distributions of female survivors and non-survivors are significantly different from each other. Female owners of non-operational firms exit to non-employment and experience large decreases in overall earnings. In contrast, persistently closed male-owned firms are not selected on pre-pandemic firm characteristics. Instead, male non-survivors are 36 percentage points more likely than male survivors to have another income-generating activity prior to the crisis. Male owners of persistently closed firms fully compensate for revenue losses in their core businesses with earnings from these alternative income-generating activities. Taken together, the evidence is most consistent with differential underlying occupational choice fundamentals for self-employed men and women in this context.