Originally published here.

The gender gap in entrepreneurship is noticeable across the countries and over time as among entrepreneurs in European countries, on average, one-third are women and two-third are men. However, the female entrepreneurship rates differ depending on the industry, i.e. in some industries such as for example ICT or construction, women account for less than 20% of entrepreneurs, while in others, for instance in education or health care, even the reversed gender gap can be observed as females constitute about 60% of entrepreneurs.

Female entrepreneurship can be explained by several theories, including the occupational choice theory with push and pull motivation concepts. According to occupational choice theory, a person who makes occupational choice has two alternative options: to become na employee or to become an entrepreneur (Kihlstrom and Laffont, 1979; Dawson et al., 2014; Fitzpatrick, 2017; Pardo and Ruiz-Tagle, 2017). Rationally, a person makes the optimal decision, comparing the expected costs and benefits of both forms, assuming that entrepreneur receives a risky entrepreneurial profit while an employee a risk-free salary.

This decision is determined by several factors, including positive ones, for example, psychological factors related to proactive and independent personality, access to financial capital or existence of market opportunities; and negative factors, for example, unemployment or unsatisfying work.

The gender pay gap, according to which women receive lower pay than men for the same work, is observed and has so far been widely analyzed in the literature (Khoreva, 2011; Lips, 2013; Arrazola and de Hevia, 2016; Ravazzini and Chesters, 2018). The gender pay gap is

explained by the human capital theory, which seeks its roots in differences in male and female

experiences, education, skills, etc., and discriminatory preferences (Barnet-Verzat and Wolff,

2008; Cutillo and Centra, 2017; Tverdostup and Paas, 2017); by institutional theory (Munir

Sidani, 2013; Reichborn-Kjennerud and Svare, 2014) or by heterodox theory (Karamessini and

Ioakimoglou, 2007). Another perspective on the gender pay gap is covered by the labor

market segmentation theory, which indicates that women are pushed to enter the secondary

labor market with lower productivity and wages (Bauder, 2001; Karamessini and

Ioakimoglou, 2007; Munir Sidani, 2013; Kovalenko and Mortelmans, 2014; Aidis and

Weeks, 2016).

If we adopt the occupational choice theory perspective, labor market discrimination against women should become a factor pushing women toward entrepreneurship. However, some research posits that entrepreneurship can be a glass cage for women, as the gender pay gap of entrepreneurial earnings is even higher than the gap in wages (Lawter et al., 2016). That in turn might make pay gap a discrimination barrier for entrepreneurial entry. Bearing in mind these interdependencies, we are thus lead to ask questions about the impact of the gender pay gap on female entrepreneurship in the context of industry segmentation.

Industries and their characteristics seem therefore to play a vital role in explaining whether and how the gender pay gap influences the occupational choice. Hence, to understand the problem, industry perspective is adopted. Industries are classified based on two aspects: the level of the gender pay gap and the level of female participation in employment, which reflects labor market discrimination in relation to earnings discrepancies and the issue of occupational segregation. This attitude lets us create a theoretical matrix of industries based on level of pay gap and level of female participation. This classification is the result of two sets of discrimination factors: pay discrimination and industry entry discrimination. Specifically, following research questions are considered in the paper:

RQ1. Does the gender pay gap impact female entrepreneurship in individual industries?

RQ2. What is the nature of the gender pay gap’s impact on female entrepreneurship? Is it

a pushing or discouraging factor?

RQ3. Are there significant differences in the impact of the gender pay gap on female

entrepreneurship in industries with different levels of gender pay gap?

RQ4. Does the female participation rate in a given industry moderate the impact of

gender pay gap on the female entrepreneurship?

RQ5. Are there significant differences in the impact of the gender pay gap on female

entrepreneurship in male-dominated and female-dominated industries?

The overall aim of the paper is to explore the relationships between the female entrepreneurship and gender pay gap in industry breakdown. We seek factors, other than pay gap, that might influence the occupational choices of women in chosen industries. The research was conducted among European countries (as their level of equality is relatively high), based on yearly panel data for the time span of 2009–2018. From our initial data set, industries or countries with too few observations were rejected, and the final study sample encompasses 12 industries and 22 countries.

Results show that the influence of the gender pay gap on female entrepreneurship strongly depends on the characteristics of industry and its equality level. The gender pay gap is a factor that negatively influences female entrepreneurship in industries with a high level of gender inequality, measured by a low level of female participation and a high level of pay gap. In industries with a relatively high female participation rate, the gender pay gap is not statistically significant in explaining female entrepreneurship; other factors, accepted in the research as control variables, shape female entry to entrepreneurship. Altogether, it can indicate that the gender pay gap should be rather treated as a measure or a symbol of discrimination which discourages women to enter into entrepreneurship in highly unequal industries rather than as a factor pushing them toward such a path. It gives support for institutional theories explaining female entrepreneurship rather than neoclassical ones.

You can read the article here.