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Gender differences in entrepreneurial choice and risk aversion -- a decomposition based on a microeconometric model

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  • Frank M. Fossen

Abstract

Why are female entrepreneurs so rare? In Germany, women exhibit both a lower entry rate into and higher exit rate from self-employment. To explain this gender gap, this study estimates a structural microeconometric model of transition rates that includes a standard risk aversion parameter. Inputs into the model are the expected value and variance of earnings from self-employment and dependent employment, estimated separately by gender and accounting for nonrandom selection into self-employment. The gender differential in the transition rates is decomposed using a novel extension of the Blinder--Oaxaca technique for nonlinear models. Women's higher estimated risk aversion explains the largest part of their higher exit rate but only a small portion of their lower entry rate.

Suggested Citation

  • Frank M. Fossen, 2012. "Gender differences in entrepreneurial choice and risk aversion -- a decomposition based on a microeconometric model," Applied Economics, Taylor & Francis Journals, vol. 44(14), pages 1795-1812, May.
  • Handle: RePEc:taf:applec:44:y:2012:i:14:p:1795-1812
    DOI: 10.1080/00036846.2011.554377
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    Citations

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    Cited by:

    1. Dorner, Matthias & Fryges, Helmut & Schopen, Kathrin, 2015. "Wages in high-tech start-ups - do academic spin-offs pay a wage premium?," IAB Discussion Paper 201517, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    2. Marco Caliendo & Frank Fossen & Alexander Kritikos, 2014. "Personality characteristics and the decisions to become and stay self-employed," Small Business Economics, Springer, vol. 42(4), pages 787-814, April.
    3. Lechmann, Daniel S. J., 2013. "Can working conditions explain the return-to-entrepreneurship puzzle?," Discussion Papers 86, Friedrich-Alexander University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
    4. Justo, Rachida & DeTienne, Dawn R. & Sieger, Philipp, 2015. "Failure or voluntary exit? Reassessing the female underperformance hypothesis," Journal of Business Venturing, Elsevier, vol. 30(6), pages 775-792.
    5. Michal Bauer & Julie Chytilová, 2013. "Women, Children and Patience: Experimental Evidence from Indian Villages," Review of Development Economics, Wiley Blackwell, vol. 17(4), pages 662-675, November.
    6. Frank M. Fossen, 2012. "Gender differences in entrepreneurial choice and risk aversion -- a decomposition based on a microeconometric model," Applied Economics, Taylor & Francis Journals, vol. 44(14), pages 1795-1812, May.
    7. repec:spr:jglont:v:7:y:2017:i:1:d:10.1186_s40497-017-0086-y is not listed on IDEAS
    8. repec:kap:sbusec:v:48:y:2017:i:3:d:10.1007_s11187-016-9793-y is not listed on IDEAS
    9. Carlianne Patrick & Heather Stephens & Amanda Weinstein, 2016. "Where are all the self-employed women? Push and pull factors influencing female labor market decisions," Small Business Economics, Springer, vol. 46(3), pages 365-390, March.
    10. Parker, Simon C., 2013. "Do serial entrepreneurs run successively better-performing businesses?," Journal of Business Venturing, Elsevier, vol. 28(5), pages 652-666.
    11. repec:kap:sbusec:v:48:y:2017:i:3:d:10.1007_s11187-016-9789-7 is not listed on IDEAS
    12. Ocaña-Riola, Ricardo & Martín-Olmedo, Piedad & Maroto-Navarro, Gracia & García-Calvente, María Del Mar & Mayoral-Cortés, José María & Ruiz-Fernández, Josefa & Sánchez-Cruz, José Juan, 2017. "Impact of the Great Recession in the Social Welfare Indicators Related to the Labour Market in Andalusia /Impacto de la Gran Recesión en los indicadores de bienestar social relacionados con el mercado," Estudios de Economía Aplicada, Estudios de Economía Aplicada, vol. 35, pages 245-262, Enero.

    More about this item

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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