Abstract:
Enterprises run by women in developing countries are often short-lived and small. Using
data from an RCT with aspiring female entrepreneurs in Pakistan, we find that providing
loans and training leads to business creation, but confirm that this effect is only observed in
the short term. Moreover, four out of five new micro-enterprises are home-based. Through
novel incentivized tasks, we find that both women and male decision-makers in their household
favor women setting up a business, but display ‘home-bias’ in preferred business location
and are willing to give up almost 60% of median profits for running the business from
home. Women also exhibit a ‘home-bias’ in source of advice, refraining from taking advice
from outsiders, even when it can increase task earnings. Our findings indicate that internalized
gender norms may contribute to explaining the small scale and brief duration of
businesses operated by women. Development interventions must take these gender norms
into account when promoting female entrepreneurship.
