Gender differences in entrepreneurial choice and risk aversion -- a decomposition based on a microeconometric model

Frank Fossen

Applied Economics, 2012, vol. 44, issue 14, 1795-1812

Abstract: Why are female entrepreneurs so rare? In Germany, women exhibit both a lower entry rate into and higher exit rate from self-employment. To explain this gender gap, this study estimates a structural microeconometric model of transition rates that includes a standard risk aversion parameter. Inputs into the model are the expected value and variance of earnings from self-employment and dependent employment, estimated separately by gender and accounting for nonrandom selection into self-employment. The gender differential in the transition rates is decomposed using a novel extension of the Blinder--Oaxaca technique for nonlinear models. Women's higher estimated risk aversion explains the largest part of their higher exit rate but only a small portion of their lower entry rate.

Date: 2012
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Related works:
Working Paper: Gender Differences in Entrepreneurial Choice and Risk Aversion - A Decomposition Based on a Microeconometric Model (2011)
Working Paper: Gender Differences in Entrepreneurial Choice and Risk Aversion: A Decomposition Based on a Microeconometric Model (2009)
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DOI: 10.1080/00036846.2011.554377

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