From the Ground Up

Abstract

Self-employment is an important component of many development strategies aiming to enhance earnings and employment among low-income populations. However, women tend to earn less than men through self-employment, calling into question the effectiveness of self-employment as a tool for bolstering women's earnings. In this paper, we identify a novel intervention that boosts women's returns from self-employment and narrows the gender earnings gap in an informal, residential market. We argue that micro-spatial resources offer gender-specific advantages to female business owners. We show how gendered constraints on women's labor market activity intersect with spatial resources to influence their likelihood of running a business and their self-employment earnings. Using data from a Colombian public housing complex, we find that the randomly assigned location of a resident's apartment significantly influences women's business activity, but not men's. Women who run informal, home-based businesses from favorable locations earn more than twice as much as comparable women, narrowing the gender earnings gap by 58.5% and earning an income that lifts them above the poverty line. This study offers a new perspective on how gender and micro-geography intersect to shape self-employment. More broadly, it reveals how an important but often-overlooked factor, micro-spatial variation, influences economic development.