Tackling the Global Profitarchy: Gender and the Choice of Business Sector

Abstract

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent. Policy Research Working Paper 8865Sectoral segregation is often used to explain a large part of a well-documented gender earnings gap in business profits. Women tend to sort into different sectors than men, and the sectors dominated by women tend to be less profitable. This paper investigates the horizontal dimension of sectoral segregation by studying global data on female and male enterprises operating in sectors that are typically dominated by the same and opposite sex. The analysis uses the novel Future of Business dataset, which spans 97 countries and was administered to enterprise owners, managers, and employees who use Facebook. The analysis finds that some of the earnings gap can indeed be explained by sector choice: female-owned businesses in male-dominated sectors make significantly higher profits than those in traditionally female sectors. The evidence points to a hierarchy of earnings, with male-owned businesses in male-dominated sectors earning the most, women in male-dominated sectors and men in female-concentrated sectors in the middle tier, and women in female-concentrated sectors at the bottom. Correlational analysis suggests that women who own businesses in male-dominated sectors are younger, married, and more likely to have inherited the business than women in female-concentrated sectors. They have similar education to women in female-concentrated sectors and present higher self-efficacy but lower entrepreneurial identity and commitment to the sector. Male support networks appear to be key for female-owned firms, with co-ownership with husbands and male role models factoring into the decision to cross over. This paper is a product of the Gender Innovation Lab, Africa Region and Gender Global Theme. It is part of a larger effort by the World Bank to provide open access to its research and make a contribution to development policy discussions around the world.

Evidence that investors penalize female founders for lack of industry fit

“…In terms of practical implications, we help to dispel the misconception that women receive less funding because they start businesses in female-dominated industries that require less capital than male-dominated ones (54,55). Although female-led ventures were associated with less funding than comparable male-led ventures across both of our studies, we found that female founders raised significantly more (not less) funding when catering to female-dominated industries considered a fit for them.…”

Trade and gender

“…This section draws on the Future of Business Survey, a collaboration between Facebook, the OECD and the World Bank to provide data on online firms that have an active Facebook business page. 26 The Future of Business Survey should not be considered representative of all business owners, but rather micro, small and medium-sized firms with an online presence on Facebook (Goldstein et al, 2019).…”

“…Women-led firms tend to be younger than the average. In the United States, the average age of womenled firms is 43 months, compared with the average of 52 months for those not led by women in 2018 (Biz2Credit, 2019;Goldstein et al, 2019) Among firms with a Facebook presence, firms owned and led by men are overwhelmingly represented among firms that have existed for over ten years (Facebook-OECD-World Bank Future of Business survey, June 2019).…”

How Large Is the Gender Dividend? Measuring Selected Impacts and Costs of Gender Inequality

“…Men's and women's jobs differ across sectors, occupations, types of jobs, and firms as multiple factors lead to gender segregation with important implications for gender gaps in earnings (Goldstein et al, 2019). The World Development Report on gender (World Bank, 2012) posited that these differences stemmed from three main factors: (i) unequal distribution of time use and care responsibilities between men and women and between households and public/private service provision; (ii) unequal access to and control over productive assets (particularly land, credit, insurance and savings but also key skills); and (iii) market and institutional failures (access to information and networks, legal and fiscal impediments, restrictive social norms).…”