Does the gender of the owner affect the productivity of enterprises in India’s informal economy?
We examine the patterns and correlates of the productivity gap between male- and female-owned enterprises in India’s informal sector. Female-owned firms are 45 per cent less productive than male-owned firms on average, with the greatest productivity gaps observed at the lower end of the productivity distribution.
We measure a firm’s productivity in terms of its labour productivity. Using decomposition methods, we find that structural effects account for approximately 73 per cent of the productivity gap, with the remainder attributable to differences in observable characteristics captured by composition effects.
We also find that, among observable characteristics, the most important set of factors explaining the gender productivity gap are the characteristics of a firm, such as its size, age, receipt of government assistance, registration with state authorities, contract-based work, and accounting records. Male-owned firms have a competitive advantage over female-owned enterprises with respect to these characteristics.