Women business owners: a source of stability during the great recession?

ABSTRACT

During the period of the Great Recession, previous research has found that women-owned firms were less likely to lay-off workers than were firms owned by men. Given that the individual firm behaviour has a cumulative effect on regional economic performance, we expect greater stability across those regions with a larger share of women-owned and managed businesses. We test this hypothesis using US county data during the period from 2007 to 2013 at the US county level. Consistent with the findings of Matsa and Miller, our results suggest that regional economic stability increases with the share of women-owned and managed establishments.

KEYWORDS:

• Women-owned businesses
• stability
• spatial econometrics

JEL CLASSIFICATION:

• R11
• R12
• J16

Acknowledgements

Support for this work was provided by the University of Wisconsin - Extension, Cooperative Extension Service, the Wisconsin Agricultural Experiment Station, University of Wisconsin – Madison, and the Idaho Agricultural Experiment Station, University of Idaho. All errors are the responsibility of the authors.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ The Herfindahl index is computed as $H_i=\sum _{s=1}^{S_i}{\left(\frac{e_{si}}{e_i}\right)}^2$ where S_i is the total number of industries in the ith region, e_si is activity in the ith region in industry s, e_i is total activity in the ith region and e is total activity in the nation. We measure total activity as the number of establishments across 87 sectors. The Herfindahl index takes on smaller values when the distribution of activity is equal across all industries. This implies that smaller values of the measure suggest greater levels of diversity, whereas larger values correspond to a more specialized economy. For a detailed discussion of alternative means of thinking about and measuring economic diversity, see Wagner (2000) and Chandra (2005).

² The indicator for the gender of the CEO and the gender of the owner are given only for the last active year of the firm; thus, we assume the gender of the owner/CEO does not change over the life of the firm.

³ While the specification of $W$ has been a source of significant debate within the spatial econometrics literature, LeSage and Pace (2009) suggest that if the model is correctly specified, the exact construction of the matrix is secondary to simply accounting for the spatial interdependency.

Additional information

Funding

This work was supported by the University of Wisconsin Agricultural Experiment Station [N/A]; University of Wisconsin Extension [N/A]; University of Idaho Agricultural Experiment Station [N/A].