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Small Business Economics

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29-07-2016

Determinants of the entrepreneurial gender gap in Latin America

Authors: Luisa Fernanda Bernat, German Lambardi, Paola Palacios

Published in: Small Business Economics | Issue 3/2017

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Abstract

This paper identifies a set of factors associated with the decision to become an entrepreneur and the variables that account for the gender gap in entrepreneurial activity in Latin America. We estimate logit models for entrepreneurial activity under three different definitions of an entrepreneur. We also estimate the gender gap by using Fairlie’s decomposition method. Depending on the definition of entrepreneur used, the overall gender gap varies from 4 to 13 % points. Differences in observable characteristics explain between 23 and 38 % of the total gender gap. The factors that explain both entrepreneurial activity and gender gap are: education, risk tolerance; own car as primary means of transportation; work satisfaction; and parent business ownership. Variables such as age, access to loans, and need for achievement are significantly associated with entrepreneurial activity, but they play a negligible role in explaining the gender gap.

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For a recent literature review see Simoes et al. (2013).

The answers are provided using a 5-level Likert-type scale.

Table 10 in “Appendix” shows the percentage of information lost for each definition of entrepreneur.

In gender analysis, since females are considered a minority or disadvantaged group, it is a common practice to calculate the explained part using male coefficients as it is assumed that males have a “non-discriminatory” coefficient structure. Since the phenomena studied here may not be strictly due to discrimination, we use pooled coefficients in our estimations.

Yun (2004) presents a review of other detailed decomposition proposed in literature including his own method. Given that the specification of our models depends on the use of many categorical variables, in the present analysis we chose to present results using Fairlie’s decomposition.

We thank an anonymous referee for suggesting this possible explanation.

We are not able to perform estimations for separate countries due to the small size of the employer entrepreneur group.

We thank an anonymous referee for suggesting these possible explanations.

Results using male coefficients are reported in Table 8 in “Appendix.”

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Title: Determinants of the entrepreneurial gender gap in Latin America
Authors: Luisa Fernanda Bernat
German Lambardi
Paola Palacios
Publication date: 29-07-2016
Publisher: Springer US
Published in: Small Business Economics / Issue 3/2017
Print ISSN: 0921-898X
Electronic ISSN: 1573-0913
DOI: https://doi.org/10.1007/s11187-016-9789-7

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