It’S Getting Crowded in Here: Experimental Evidence of Demand Constraints in the Gender Profit Gap

Morgan Hardy and Gisella Kagy

The Economic Journal, 2020, vol. 130, issue 631, 2272-2290

Abstract: This article considers market-level contributors to the well-documented gender profit gap among micro-entrepreneurs. We combine data from a garment-making firm census and market research survey in Ghana, uncovering a gender gap in the market-size-to-firm ratio and observing disproportionate self-reports of ‘not enough customers’ from female owners. We develop a simple model and discuss implications of potential gender differences in demand constraints. As experimental corroboration, we show that female-owned firms expand production and experience profit increases in response to random demand shocks, while male-owned firms do not. Nationally representative data echoes our experimental findings, showing more crowding in female-dominated industries.

Date: 2020
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