The inverted u-shaped relationship between female entrepreneurship and economic development

Nava Ashraf, Alexia Delfino, Edward L. Glaeser and Irene Solmone

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: In the World Bank Enterprise Survey, the share of entrepreneurs who are women first rises and then falls with national income, while female labor force participation has the opposite U-shaped pattern. We present a model in which gender-based disadvantages, such as discrimination and household obligations, deter firm formation in poor countries and complex firm formation in rich countries. In middle-income countries, high returns to entrepreneurship offset gender-based costs, and firms remain simple. We document that female-owned firms are smaller and simpler. Larger firms are more productive. The female entrepreneurship rate is associated with female education, weak kinship ties, and Buddhism.

JEL-codes: J01 N0 R14 (search for similar items in EconPapers)
Pages: 9 pages
Date: 2025-05-31
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Published in AEA Papers and Proceedings, 31, May, 2025, 115, pp. 500 - 508. ISSN: 2574-0768

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