Does the Gender of the Owner Affect the Productivity of Enterprises in India’s Informal Economy?

Abstract

We examine the patterns and correlates of the productivity gap betweenmale- and female-owned enterprises in India’s informal sector.Female-owned firms are 45 per cent less productive than male-owned firmson average, with the greatest productivity gaps observed at the lower end ofthe productivity distribution. We measure a firm’s productivity in terms ofits labour productivity. Using decomposition methods, we find thatstructural effects account for approximately 73 per cent of the productivitygap, with the remainder attributable to differences in observablecharacteristics captured by composition effects. We also find that, amongobservable characteristics, the most important set of factors explaining thegender 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 acompetitive advantage over female-owned enterprises with respect to thesecharacteristics.