28. Gender gaps in entrepreneurship remain

David Halabisky

Helen Shymanski

Abstract

The persistent gender gap in entrepreneurship continues to cost economies across the OECD. Prior to the COVID-19 pandemic, the gender gap had closed slightly in recent years. However, evidence suggests that the pandemic reversed some of this progress. This chapter presents data on trends in women’s entrepreneurship and self-employment across OECD countries for the period 2016-21. The chapter calls for governments to go further to address gender gaps in entrepreneurship and self-employment, including through the use of direct and indirect policy measures. It proposes future policy directions, notably greater use of tailored policy interventions.

Key findings

The gender gaps in entrepreneurship are persistent and costs economies ideas, innovation and jobs. These gender gaps are due to a range of factors, including gender differences in motivations for entrepreneurship and in the number and scale of barriers faced in the areas of entrepreneurship skills, access to finance and networks.
Prior to the COVID-19 pandemic, there was evidence that the gender gaps in business creation and self-employment were closing in the majority of OECD countries. For example, the gender gap among those starting and managing new businesses closed in 15 out of 26 OECD countries between 2016 and 2021. Nonetheless, women remained about two-thirds as likely as men to be involved in business creation in 2021.
However, emerging evidence suggests that some of the progress made in reducing gender gaps in entrepreneurship was reversed during the pandemic. Women-operated businesses were more likely to close during the COVID-19 pandemic than those operated by men and faced greater reductions in hours worked and income. This is largely due to sector effects but also due to a gender imbalance in taking on family responsibilities during the pandemic (e.g. home-schooling) and greater difficulties accessing emergency business support schemes due to eligibility criteria (e.g. revenue thresholds and sector).

The persistent gender gap in entrepreneurship is costing the economy

Long-standing gender gaps in entrepreneurship continue to cost the economy in missed opportunities for job creation, growth and innovation. For example, if women started and scaled businesses at the same rate as men, up to CAD 150 billion (EUR 105 billion) could be added to the Canadian economy (approximately 6% of GDP) (Government of Canada, 2021[1]). The OECD has had a strong role in pushing women’s entrepreneurship as a policy priority in the G20, which the Indonesian presidency identified as one of the priority issues in the W20 (the official G20 engagement group on gender equity).

The COVID-19 pandemic has shone the spotlight on gender inequalities in entrepreneurship. Mounting evidence shows that women entrepreneurs experienced disproportionate negative impacts relative to men throughout the pandemic, including higher business closure rates and greater declines in income (OECD/European Commission, 2021[2]). The OECD/Facebook/World Bank Future of Business Survey (2020[3]) shows that women-led businesses were more likely to close than men-led businesses between January and May 2020 (26% vs. 20%). This gender gap in business closure rates narrowed as the pandemic continued but increased again in 2021. In July 2021, the same survey showed that 25% of women-led businesses reported closure relative to 17% of men-led businesses (META, 2022[4]). Similarly, national surveys consistently show that women entrepreneurs were more likely to have their volume of work and income reduced. For example, a survey in Germany showed that self-employed women were one-third more likely to face income loss due to the pandemic than self-employed men (Graeber, Kritikos and Seebauer, 2021[5]).

These gender gaps related to the COVID-19 pandemic are largely explained by sector effects as there was a higher concentration of women entrepreneurs operating in the hardest hit sectors (e.g. Personal services, Accommodation and food services, Arts and entertainment, and Retail trade) (OECD/European Commission, 2021[2]; Graeber, Kritikos and Seebauer, 2021[5]). However, a number of other factors also played a role. First, there is some evidence to suggest that women entrepreneurs were more likely to take on greater household responsibilities during the crisis compared to men, which reduced the amount of time that they could dedicate to their business. In an OECD survey, about one-quarter of all women business leaders reported spending six hours or more per day on unpaid domestic responsibilities between May and October 2020 compared to only 11% of all male business leaders (Facebook, OECD and World Bank, 2020[3]). Second, surveys during the first six months of the pandemic suggested that women entrepreneurs had difficulties accessing COVID-19 support schemes for entrepreneurs, often because their business did not meet revenue thresholds or because schemes were targeted at sectors where women are under-represented (OECD/European Commission, 2021[2]). However, an OECD survey in July 2021 showed that women-led businesses were as likely as those led by men to report that they could access support schemes as male-led businesses (META, 2022[4]). This suggests that access to support schemes improved over time.

Women are 30% less likely than men to be starting or managing a new business

The share of women involved in starting and managing new businesses (i.e. less than 42 months old) varies greatly across OECD countries. In 2021, women were the most active in starting and managing new businesses in Chile (25%), Brazil (19%) and Canada (16%) and least active in Poland (2%), Norway and Italy (less than 4% each) (Figure 28.1). Countries with high proportions of women involved in entrepreneurship tend to have higher levels of entrepreneurship overall and higher proportions of people reporting that they started a business due to a lack of employment opportunities. Across OECD countries, women entrepreneurs were about 20% more likely than male entrepreneurs to report that they started their business because they lack opportunities in employment (OECD/European Commission, 2021[2]).

Overall, women were about 30% less likely than men to be involved in starting and managing a new business in OECD countries in 2021. The gap in early-stage entrepreneurship was substantial in many countries but virtually non-existent in a small number of countries, including Poland, Romania and Spain. The gender gap in early-stage entrepreneurship rates can be explained by a range of factors, including differences in access to finance, mentorship, networks as well as attitudes towards and motivations for entrepreneurship between women and men. Differences across countries are also explained by a variety of factors, including the regulatory framework, market conditions, access to finance, creation and diffusion of knowledge, entrepreneurial capabilities, and social attitudes towards entrepreneurship. Each of these factors often has different influences for men and women entrepreneurs.

In addition, women tend to face more and greater barriers to business creation than men and these barriers are often inter-related and reinforce each other. Research suggests that women have, on average, lower levels of basic financial knowledge, financial literacy skills and digital skills (OECD/European Commission, 2022[6]; OECD/European Commission, 2023[7]; Oggero, Rossi and Ughetto, 2019[8]) (Chapter 12). Moreover, women are about 75% as likely as men to report that they have the skills and knowledge needed to start a business, which reduces their capacity to identify external financing and build professional networks (OECD/European Commission, 2021[2]).

The gender gap among people starting and managing new businesses closed across OECD countries only slightly between 2016 and 2021. The gap closed by more than 5 percentage points in several countries, including Romania (-7 percentage points), Ireland, Slovenia and Poland (-5 percentage points each). However, the gap increased by more than 3 percentage points in Korea (3 percentage points), Sweden (3 percentage points) and Brazil (4 percentage points).

Figure 28.1. Women are less likely than men to be involved in early-stage entrepreneurship

Women are about two-thirds as likely as men to be self-employed

Women were also less likely to be self-employed than men in most OECD countries between 2016 and 2021. Women were slightly more likely than men to be self-employed in only one OECD country in 2021 –Türkiye (31% vs. 30%). Self-employment rates among women were highest in countries such as Colombia (51%), Mexico (32%) and Türkiye (31%), where they were also high for men (Figure 28.2). The high self-employment rates in these countries can, in part, be explained by the high levels of informal work among the self-employed. Conversely, self-employment rates for men and women tended to be lower in countries such as Norway (3%), Denmark (6%) and Sweden (6%), where unemployment is low and social welfare systems provide greater support to individuals. These countries also tend to have a higher share of employment in the public sector.

The gender gap in self-employment closed in 24 OECD countries between 2016 and 2021. Most notably, the gap reversed in Türkiye and closed substantially in Ireland (3 percentage points). The reduction of the gap in most countries was due to an increase in the number of self-employed women as well as a decrease in the number of self-employed men (OECD, 2020[13]). Moreover, in Ireland, there was a disproportionate increase in self-employment among women over 50 years old, which is partly due to women pursuing more flexible career pathways after starting a family. Traditionally, self-employed women in Ireland have had greater difficulties accessing maternity benefits than those working as employees, which was widely viewed as being a disincentive to entrepreneurship for many young women (OECD, 2020[13]).

Figure 28.2. Women are less likely than men to be self-employed

Self-employed women are 60% as likely as self-employed men to employ others

Overall, the share of self-employed workers who employ others has been trending downwards for more than 20 years. This trend is largely driven by an increase of part-time self-employment and the growth in freelance work. However, the share of self-employed workers who are employers has declined at a faster rate over the past two years due to the COVID-19 pandemic because a common response to the economic crisis by employers was to let employees go (OECD/European Commission, 2021[2]; Mindes and Lewin, 2021[16]). While non‐standard workers such as the self-employed were often covered by job retention schemes, there were substantial gaps in coverage during the early months of the pandemic and the self-employed could not always qualify for business support schemes because they were below revenue thresholds (Spasova and Regazzoni, 2022[17]).

The gender gap among employers changed little in recent years. Between 2016 and 2020, it narrowed very slightly in 24 OECD countries but remained unchanged overall (Figure 28.3). Self-employed women are less likely to be employers than self-employed men for a variety of reasons, including differences in growth ambitions for their businesses. Data for the European Union show that self-employed women are slightly more likely than self-employed men to report a preference for working alone (31% vs. 26% in 2017) (OECD/EU, 2019[18]). In addition, women business owners often operate different types of businesses relative to men, on average, due to a range of factors, such as differences in motivations, the influence of traditional gender roles in society as well as the impact of policy (e.g. family policy, tax policy) on labour market decisions (Halabisky, 2018[19]). On average, women entrepreneurs tend to operate in sectors that are less conducive to growth (e.g. personal services) and are less likely to use growth-oriented business strategies (e.g. women entrepreneurs are less likely to export – Chapter 30) (OECD/EU, 2019[18]; OECD/European Commission, 2021[2]).

Figure 28.3. Self-employed women are less likely than men to employ others

More effective policy actions are needed to address gender gaps in entrepreneurship and self-employment

Many governments seek to reduce gender gaps in entrepreneurship using a range of policy measures that aim to minimise market (e.g. access to finance – Chapter 29), institutional (e.g. maternity benefits – Chapter 23) and policy implementation failures (e.g. beneficiary selection bias) that constrain women entrepreneurs. Governments in OECD countries commonly offer a suite of direct measures that aim to address gaps in access to resources, including dedicated entrepreneurship training schemes, coaching and mentoring offers, dedicated networking supports and a range of instruments to address financial gaps. Estimates suggest that women and men are about 4% more likely to start a business after they have participated in an entrepreneurship training course (Cowling, 2009[20]), while more intensive and selective formats of entrepreneurship training tend to report stronger outcomes (OECD/European Commission, 2023[7]). This is the case, for example, for the Women in Rural, Regional and Remote Enterprises (WiRE) Program (Australia). Evaluations of this entrepreneurship bootcamp for women entrepreneurs found that 82% of participants reported an increase in entrepreneurship skills and 86% in building networks (Wiesner, 2018[21]).

Governments can go further by building a more gender inclusive infrastructure to support entrepreneurs. Some countries such as Australia, Canada, Costa Rica, the United Kingdom and the United States have implemented policies that address the overall entrepreneurial ecosystem, which tend to focus on expanding gender inclusivity to ensure that women entrepreneurs benefit from existing supports (OECD, 2021[22]). For example, the Government of Canada launched the Women’s Entrepreneurship Strategy (WES) in 2018 which represents an investment of CAD 6 billion (EUR 4.3 billion), including CAD 165 million (EUR 115 million) for the WES Ecosystem Fund to support women in starting and scaling their businesses; CAD 13.6 million (EUR 9.5 million) towards the Women Entrepreneurship Knowledge Hub to improve access to entrepreneurial knowledge, data and best practices; CAD 55 million (EUR 38 million) towards the Women Entrepreneurship Loan Fund to provide loans to diverse women entrepreneurs; and CAD 15 million (EUR 10.4 million) towards the Inclusive Women Venture Capital Initiative to build a more inclusive risk and venture capital environment (Government of Canada, 2021[1]).

Governments also use indirect measures that address the fundamental challenges to gender equity, social justice, economic security and empowerment, which all have an influence on labour market and entrepreneurship decisions. These types of interventions focus on shifting institutional, cultural and normative characteristics to be more women-focussed. Common approaches include encouraging the participation of women in the labour market, addressing the inequitable distribution of care work, promoting entrepreneurial women role models, publicising profiles of women entrepreneurs through award programmes, and ensuring that the education system encourages women to pursue entrepreneurship and self-employment, especially in Science, Technology, Engineering and Mathematics (STEM) fields (Chapter 9). While empirical evidence is limited on the impact of indirect measures, conceptual research acknowledges the importance of the influence of these measures on entrepreneurial intentions (Bosma et al., 2012[23]; Laviolette, Lefebvre and Brunel, 2012[24]; Greene, Han and Marlow, 2013[25]). Some examples of initiatives that promote positive role models have demonstrated positive impacts, such as the National Women’s Enterprise Day in Ireland which showcases a range of women entrepreneurs to counter gender stereotypes by highlighting women entrepreneurs who work in sectors that are traditionally perceived as “masculine” (Halabisky, 2018[19]). This programme receives wide coverage in newspapers and national public television and reaches an estimated 2 million people.

To close gender gaps in entrepreneurship, women’s entrepreneurship policies need to be better adapted to the needs and challenges of women entrepreneurs. Governments could do more to strengthen policy frameworks and delivery systems. Greater efforts are needed to implement policy actions designed to address the underpinning biases in society and the labour market, including the introduction of systemic methods for monitoring the impacts of women’s entrepreneurship policy against policy objectives and for identifying progress relative to targets and the effectiveness of different measures as these types of interventions remain limited.

Key policy messages

After a reduction in many of the gender gaps in entrepreneurship over the past decade, COVID-19 has reversed some of the progress made. This calls for renewed attention from governments to address persistent gender inequalities in entrepreneurship through packages of direct and indirect support measures.
There is a need for greater use of tailored policy interventions to meet the diverse needs of women entrepreneurs. The COVID-19 crisis re-emphasised the importance of tailored support schemes as women were among the most impacted yet faced challenges in accessing support.
Governments could do a better job of measuring women’s entrepreneurship and the impacts of policy. This will improve policy design and facilitate knowledge sharing and policy transfers.

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