Macroeconomic Effects of Entrepreneurial Gender Gaps

Abstract

Several gender gaps have shrunk over past decades in developed countries. However, a gender gap in entrepreneurship sill persists. In fact, the difference between men and female entrepreneurs have risen in recent decades. Fewer female entrepreneurs, in quantity and quality, can decrease aggregate output and productivity. The entrepreneurial gap can be caused by four labor market distortions: (i) a gender profit gap, (ii) the presence of household production, (iii) a capital restriction for female entrepreneurs and a (iv) wage gap. Using a span-and-control model, this thesis measures the macroeconomic effects of each distortion and identifies which ones have negative effects. A 20% household productivity increase leads to a 6.3% reduction of GDP, while a profit gap of 20% can decrease GDP in 3%. In contrast, the capital and wage gaps have little and no impact on macroeconomic variables in the general equilibrium. Overall, these findings suggest that childcare policies and reducing a gender profit gap can increase aggregate output and productivity.