Rule of Law and Female Entrepreneurship / Nava Ashraf, Alexia Delfino, Edward L. Glaeser.

Format:

Book

Author/Creator:

Ashraf, Nava.

Contributor:

National Bureau of Economic Research.

Delfino, Alexia.

Glaeser, Edward L.

Series:

Working Paper Series (National Bureau of Economic Research) no. w26366.

NBER working paper series no. w26366

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2019.

Summary:

Commerce requires trust, but trust is difficult when one group consistently fears expropriation by another. If men have a comparative advantage at violence and there is little rule-of-law, then unequal bargaining power can lead women to segregate into low-return industries and avoid entrepreneurship altogether. In this paper, we present a model of female entrepreneurship and rule of law that predicts that women will only start businesses when they have both formal legal protection and informal bargaining power. The model's predictions are supported both in cross-national data and with a new census of Zambian manufacturers. In Zambia, female entrepreneurs collaborate less, learn less from fellow entrepreneurs, earn less and segregate into industries with more women, but gender differences are ameliorated when women have access to adjudicating institutions, such as Lusaka's "Market Chiefs" who are empowered to adjudicate small commercial disputes. We experimentally induce variation in local institutional quality in an adapted trust game, and find that this also reduces the gender gap in trust and economic activity.

Notes:

Print version record

October 2019.