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Small Business Economics

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05-05-2023 | Research article

Labor market regulation and gendered entrepreneurship: a cross-national perspective

Authors: María J. Angulo-Guerrero, Elena Bárcena-Martín, Samuel Medina-Claros, Salvador Pérez-Moreno

Published in: Small Business Economics | Issue 2/2024

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Abstract

This research examines the extent to which labor regulatory context matters for entrepreneurial activity under a gender perspective, using institutional economics and feminist theories as the analytical framework. We conduct a panel data analysis for 86 countries during the period 2004–2018 by differentiating between high-income and developing economies. Our findings highlight that while the links between labor regulation and entrepreneurial activity seem negligible in high-income economies, in developing economies labor flexibility is closely associated with female entrepreneurship. However, unlike the market-oriented view on the positive association between labor market flexibility and entrepreneurship, our results point out that in these economies more flexible labor regulation is related to lower early-stage female entrepreneurial activity, even though this relationship tends to vanish as the level of economic development of the country increases. This study contributes theoretically, helping to advance the analysis of gender differences in entrepreneurial activity from an institutional approach, and practically, providing evidence to policy makers on possible gender differences in the application of country-level labor market regulation in terms of entrepreneurial activity.

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Elam et al. (2019) emphasize that current prevalence rates of female entrepreneurship vary across countries according to the level of economic development: while in low-income countries the percentage of adult working-age women who are either in the process of starting a new business or have had businesses for less than 42 months—total entrepreneurship activity (TEA) rate—is 10.2%, in high-income countries this rate slips to 8.4%. In comparison with men, female entrepreneurial activity is over 80% of men’s TEA rate in low-income economies, while women’s TEA represents less than 66% of men’s in high-income countries. Thus, in low-income countries the TEA rate is greater and females account for a higher share of TEA than in high-income countries.

Policies based on the feminist standpoint perspective might focus on changing social structures in order to cater to women’s requirements. Gender quotas to increase the representation of women on corporative boards or gender-specific business training for entrepreneurs are some examples.

This fact is usually accompanied by the fewer possibilities that talented women have to reach positions of high responsibility in companies in comparison to their male peers. This way, the growing public debate and literature on the pertinence of introducing gender quotas in both public and privates spheres highlights the benefits that particularly more talented women could receive (International Labour Organization, 2016; Paoloni & Demartini, 2016; World Bank, 2015).

For example, redundancy pay reduces a company´s cash-flow expectation and might enhance the risk of future economic losses (Kanniainen & Vesala 2005).

Recall that 0 corresponds to highest restraints and 100 corresponds to the maximum level of labor market flexibility.

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Title: Labor market regulation and gendered entrepreneurship: a cross-national perspective
Authors: María J. Angulo-Guerrero
Elena Bárcena-Martín
Samuel Medina-Claros
Salvador Pérez-Moreno
Publication date: 05-05-2023
Publisher: Springer US
Published in: Small Business Economics / Issue 2/2024
Print ISSN: 0921-898X
Electronic ISSN: 1573-0913
DOI: https://doi.org/10.1007/s11187-023-00776-0

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