Self-Employment, Gender and Cultural Traits

Abstract

ABSTRACT:Though the gap between female and male entrepreneurship has been narrowing globally, it is still evident with female rates lagging behind those of males. While existing literature has identified several obstacles to female entrepreneurship, the role of cultural traits has not yet been adequately explored. More importantly, lacking from the literature is a close investigation of female entrepreneurial choices using individual level data across countries. Employing World Values Survey data, an extensive longitudinal panel study of countries over time with over 300,000 individual level observations, we look at how cultural indicators impact female entrepreneurship. Using probit limited dependent variable models, we analyze specifically how cultural indicators impact female entrepreneurship, using measures of independence, obedience, and control over one's own life as our cultural indicators. In our analysis, we control for age, marital status, social class, town size, and level of education, as these factors have an effect on the decision to be self-employed. We also conducted robustness analysis using alternate cultural indicator variables to look for any change when compared to our benchmark findings. Our findings show that being a female lowers the probability of being self-employed. This supports the existing literature that shows a gap, albeit narrowing, between male and female entrepreneurship. Our main set of results also show that the cultural traits of independence and sense of control over one's life both help alleviate the negative impact of gender (being a female) on entrepreneurial choices. As a society, valuing obedience has the opposite impact – it magnifies the negative effect of being female on the probability of being self-employed. These findings were shown to be robust when we incorporated alternate cultural indicator variables. Our findings suggest that consideration should be given to cultural traits in the context of development outcomes. Because cultural traits can be difficult to change, our results suggest that as policy makers implement interventions to promote self-employment among females, they should be aware of the relevant cultural factors of the area and how these interact with female entrepreneurship. Policy can then be tailored to the cultural environment to maximize the intended effect on female entrepreneurship rates.