The Other Gender Gap: Female Entrepreneurship after WWII

Abstract:

I exploit exogenous variation in the marriage market across the US caused by World War II casualties to provide causal evidence on how opportunity cost influences women’s entrepreneurship decisions. I show that marriage is an important form of opportunity cost hindering women from starting new businesses. World War II casualties affected the local marriage market for single women and access to capital for war widows. Using novel business registration and individual-level census data, I find that single women are more active in starting new businesses when they face worse prospects in the marriage market. As a result, US counties with heavier casualties had a higher female share of entrepreneurs. This difference persists to this day. Evidence in favor of the marriage-market channel suggests that reducing opportunity cost is more effective in encouraging female entrepreneurship than merely providing financial subsidies.

Last updated on 02/02/2018