Gender Differences in Firm Performance: Selection and Misallocation in Mexico

Jose Lopez and Ashantha Ranasinghe

No 2025-10, Working Papers from University of Alberta, Department of Economics

Abstract: We analyze micro-scale businesses in Mexico and find large gender gaps in sales, profit, and access to finance. Accounting for differences in education and entrepreneurial commitment, women-owned firms perform worse and receive less financing than comparable men-owned firms. We interpret these patterns in a model economy where individuals with different managerial abilities choose between wage work and entrepreneurship, while women face discrimination in labor and credit markets. The model replicates observed gender differences in occupations and capital use. Equalizing credit access sharply reduces gender gaps in entrepreneurial earnings, but implies only modest aggregate gains on productivity and output. Size-dependent taxes or income subsidies generate smaller impacts or far more costly gains.

Keywords: informality; gender; micro-firms; misallocation; finance (search for similar items in EconPapers)
JEL-codes: J16 O10 O40 O50 (search for similar items in EconPapers)
Pages: 51
Date: 2025-12-31
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