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Women taking risks: closing the gender gap in entrepreneurship

29 September 2015
by Guest author

EAG 2015OECD Statistics Directorate

Women entrepreneurship is increasingly recognised as a key source of employment creation and innovation, and for addressing inequalities. McKinsey for example have just published a study estimating that “$12 trillion could be added to global GDP by 2025 by advancing women’s equality.” Women entrepreneurs could be a major part of this, but the latest figures presented in the OECD’s Entrepreneurship at a Glance 2015 show that in OECD countries there are two and a half times more men than women that are self-employed with paid employees. On average, 2.2% of all employed women are entrepreneurs who employ paid personnel, while the average for men is 5.6%. There are gender differences also when looking at the sectors of entrepreneurial activity, with a higher concentration of women in the services sector, particularly trade and hotels, while only few have businesses in manufacturing and construction. However, these patterns seem to be changing for young women entrepreneurs. Evidence points to considerable diversity in many OECD countries, including high shares of young women owning businesses in the construction sector, suggesting that stereotype barriers may be eroding.

Encouraging findings are also observed in terms of earnings from self-employment. Although a gender gap continues to exist in all countries, it has nevertheless decreased significantly in many. This is particularly true for Belgium, Finland, Iceland, Luxembourg, and the Netherlands where the gap has closed by more than 10% in recent years (see figures 1 and 2).

Figure 1. Gender gap in self-employment earnings
Percentage

Click to see full size or on the link below for the original data

http://dx.doi.org/10.1787/888933231185

Figure 2. Changes in gender gap in self-employment earnings

Percentage points, 2010-11 average compared to 2006-07 average

Fig 2

Click to see full size or on the link below for the original data

http://dx.doi.org/10.1787/888933231194

This could be an important driver for inspiring entrepreneurial motivation among women. Indeed, the fear of low or erratic earnings is one of the main reasons why many people do not become entrepreneurs. While entrepreneurship is a pathway to wealth for highly successful individuals, many people that are self-employed struggle instead with relatively low incomes, a condition that results in lower opportunities to accumulate savings and a higher likelihood of falling into poverty if the business fails.

Inevitably, there are risks when choosing to set-up a new business. But some of these risks, like achieving a gratifying remuneration or attaining a satisfactory work-life balance are often more inhibiting for women than for men. In fact, independently of a country’s economic context and cultural attitude toward entrepreneurship, women always appear less prone to take the risk of creating their own business than men (see figure 3). The share of men who would rather take a risk and build their own business than work for someone else is larger in virtually all countries, from high income OECD countries to least developed low income economies. There are a few exceptions where woman are more willing to take the risk, including Mexico and South Africa.

Figure 3. Willingness to take the entrepreneurial risk

2013, Percentage

Fig 3

Click to see full size or on the link below for the original data

http://dx.doi.org/10.1787/888933230517

Why are women less willing to engage in entrepreneurship? Perhaps because the share of women declaring that they have access to money or training to start-up and grow a business is always inferior to the corresponding share of men. As expected, the average share of women having access to money or training is the highest in OECD countries and lowest in low income countries. However, the main fact remains that across all countries in the world there is an important gender gap in accessing funds and training which are key ingredients for becoming an entrepreneur.

Evaluating the policies that support women entrepreneurs is complicated by the difficulty of measuring gender differences in entrepreneurship. The evidence presented Entrepreneurship at a Glance 2015 clearly shows that policy initiatives are needed to improve access to finance and training for setting up a business. Such initiatives would have a beneficial impact on women’s willingness to become entrepreneurs.

Useful links

Entrepreneurship at a Glance 2015

Gender Data Portal

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