About half of the world’s population is self-employed, and self-employed women earn only about half as much as men, according to the World Bank. Social scientists believed for years that increasing women’s access to capital would shrink the earnings gap.
But in developing countries, they found that new influxes of cash often went to shore up the businesses of men—whereas the women’s businesses more often stayed flat.
“There is no country in the world without a gender gap in earnings,” said Solène Delecourt, a Berkeley Haas assistant professor of management who studies inequality in business performance. “Women everywhere face unique constraints, and a one-size-fits-all solution sometimes can lead to positive benefits for men, but not for women.”
In three new studies, Delecourt and colleagues looked at why women-owned businesses in Uganda, Kenya, and India underperform businesses operated by men in those countries. Their findings not only include some surprises, but hold clues for specific strategies to address earnings inequality everywhere.