Rule of Law and Female Entrepreneurship

Nava Ashraf, Alexia Delfino () and Edward Glaeser

No 26366, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Commerce requires trust, but trust is difficult when one group consistently fears expropriation by another. If men have a comparative advantage at violence and there is little rule-of-law, then unequal bargaining power can lead women to segregate into low-return industries and avoid entrepreneurship altogether. In this paper, we present a model of female entrepreneurship and rule of law that predicts that women will only start businesses when they have both formal legal protection and informal bargaining power. The model's predictions are supported both in cross-national data and with a new census of Zambian manufacturers. In Zambia, female entrepreneurs collaborate less, learn less from fellow entrepreneurs, earn less and segregate into industries with more women, but gender differences are ameliorated when women have access to adjudicating institutions, such as Lusaka's “Market Chiefs” who are empowered to adjudicate small commercial disputes. We experimentally induce variation in local institutional quality in an adapted trust game, and find that this also reduces the gender gap in trust and economic activity.

JEL-codes: J16 K40 O15 R12 (search for similar items in EconPapers)
Date: 2019-10
New Economics Papers: this item is included in nep-ent, nep-gen, nep-lab, nep-law and nep-ltv
Note: LS PR
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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