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Gender Differences in Firm Performance: Selection and Misallocation in Mexico

Author

Listed:
  • Jose Joaquin Lopez

    (University of Memphis)

  • Ashantha Ranasinghe

    (University of Alberta)

Abstract

We analyze micro-scale businesses in Mexico and find large gender gaps in sales, profit, and access to finance. Accounting for differences in education and entrepreneurial commitment, women-owned firms perform worse and receive less financing than comparable men-owned firms. We interpret these patterns in a model economy where individuals with different managerial abilities choose between wage work and entrepreneurship, while women face discrimination in labor and credit markets. The model replicates observed gender differences in occupations and capital use. Equalizing credit access sharply reduces gender gaps in entrepreneurial earnings, but implies only modest aggregate gains on productivity and output. Size-dependent taxes or income subsidies generate smaller impacts or far more costly gains.

Suggested Citation

  • Jose Joaquin Lopez & Ashantha Ranasinghe, 2025. "Gender Differences in Firm Performance: Selection and Misallocation in Mexico," Working Papers 2025-10, University of Alberta, Department of Economics.
    • Handle: RePEc:ris:albaec:021996
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    File URL: https://sites.ualberta.ca/~econwps/2025/wp2025-10.pdf
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    More about this item

    Keywords

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    JEL classification:

    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General

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