Female Representation and Talent Allocation in Entrepreneurship: The Role of Early Exposure to Entrepreneurs

Abstract

This paper shows that exposure to entrepreneurs during adolescence increases women's entry and performance in entrepreneurship and improves the allocation of talent in the economy. Using population-wide registry data from Denmark, we track nearly one million individuals from adolescents to adulthood and exploit idiosyncratic within-school, cross-cohort variation in exposure to entrepreneurs, as measured by the share of an adolescent's peers whose parents are entrepreneurs at the end of compulsory school. Early exposure, and in particular exposure to the entrepreneur parents of female peers, encourages girls' entry and tenure into this profession, while it has no effect on boys. The increase in female entrepreneurship is associated with the creation of successful and female-friendly firms. Furthermore, early exposure reduces women's probability to discontinue education at the end of compulsory school and to hold low wage jobs through their lives. Together these results challenge the view that the most successful female entrepreneurs would enter this profession regardless of early exposure.