Gender Differences in Entrepreneurial Choice and Risk Aversion: A Decomposition Based on a Microeconometric Model
43 Pages Posted: 4 Nov 2009
Date Written: October 14, 2009
Abstract
Why are female entrepreneurs so rare? Women have both to a lower entry rate into self-employment and a higher exit rate in Germany. To explain the gender gap, a structural microeconometric model of the transition rates is estimated, which includes a standard risk aversion parameter. As inputs into the model, the expected value and variance of earnings from self-employment and dependent employment are estimated separately by gender, accounting for non-random selection into the employment states. The gender differential in the transition rates is decomposed using a novel extension of the Blinder-Oaxaca technique for nonlinear models. Women's higher estimated risk aversion is found to explain the largest part of their higher exit rate, but only a small part of their lower entry rate.
Keywords: entrepreneurship, self-employment, risk aversion, gender differential, Nonlinear Blinder-Oaxaca Decomposition
JEL Classification: J23, J16, D81
Suggested Citation: Suggested Citation
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