Macroeconomic Costs of Gender Gaps in a Model with Household Production and Entrepreneurship

Abstract

This paper examines the quantitative effects of gender gaps in entrepreneurship and workforce participation in an occupational choice model with a household sector. Gender gaps in entrepreneurship affect negatively both income and aggregate productivity, since they reduce the entrepreneurs’ average talent and female labor force participation. We estimate the gender gaps for 37 European countries and we find that gender gaps cause an average market output loss of 11.5% when they are considered constant across talent levels. The loss in total output, which also includes household production, varies between 6.4% and 8.7%, depending on the household productivity parameter.

Keywords: Gender-specific occupational choice frictions, Entrepreneurhsip talent misallocation, Total output

JEL Classification: E2, J21, O40