Possitive externalities of female entrepreneurship

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Possitive externalities of female entrepreneurship

"Although the vast majority of entrepreneurs in the developed world are male, when the business is about things that really matter it is usually woman that is the entrepreneur."

Robbin Te Velde

It is undeniable that the inclusion of women in the labour force has not only been a great step towards equal gender rights, but a great thing for the economy as well. The literature interested in female entrepreneurship has also increased accordingly. What is interesting is that the number of women who run their own businesses (as measured by self-employment statistics) has increased at a fast pace when compared to the overall number of women participating in the labour force. To put this in numbers, female self-employment segment in the US between 1975 and 1990 grew by a stunning 145 percent.

Much of the existing research in female entrepreneurship investigate the economic factors, home responsibilities or psychological factors that push or pull women to start their own business. Children seem to play a significant role in women's choice to engage in wage-employment or to become entrepreneurs. Taking into consideration the antiquated social norms that kept the women away from employment in the first place (e.g. carry the family burden), it is not unlikely to assume that they have been eliminated altogether from today’s societies. Women who cannot manage both family and work, will most likely choose to give up work, particularly if their husband or own family are capable to support them somehow.

A study on female self-employment and children shows that the existence of more than one child strongly increases women's probability to engage with self-employment. The effect is even greater for older women than younger women. For younger women self-employment has a significant negative impact on the probability of having children, while for older women self-employment positively influences probability of having children. This means that women start-up their businesses for different reasons than men, regardless of income potentials or female psychology.
“The causal impact of children on the decision of women to be self-employed suggests structurally different start-up motivations and growth aspirations of women compared to men”

Florian Noseleit

Thus, one could argue that there is at least one good reason to create policies that help women start and manage their own businesses; to allow them to remain active within the labour force without giving up on raising a family.


References

Devine, T.J., 1994. Changes in wage-and-salary returns to skill and the recent rise in female self-employment. The American Economic Review, 84(2), pp.108-113.

Noseleit, F., 2014. Female self-employment and children. Small Business Economics, 43(3), pp.549-569.

Te Velde, R., 2004. Schumpeter’s theory of economic development revisited. Innovation, Entrepreneurship and Culture: The Interaction Between Technology, Progress and Economic Growth, Cheltenham: Edward Elgar, pp.103-129.

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