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United States Small Business Administration
Office of Advocacy
RS 151
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Purpose
Despite the rapid increase in the number of businesses owned by women, there has been little research on the financial success of women business owners. The Office of Advocacy, as part of its continuing efforts to understand the role of women business owners, sponsored this project to examine the financial success of women business owners, relative to men.
That women as employees earn less than equally qualified men has
been well established by numerous studies. One source of these
lower earnings for women is discrimination against women by employers.
(Discrimination is taken to be any earnings differential that
remains after all other "explanatory" determinants of
income are statistically controlled.) Women who are business owners
would not suffer labor market discrimination, and therefore, business
ownership should offer women a more equal opportunity compared
with employment. However, there may be discrimination against
women in product or credit markets that could reduce the earnings
of women business owners. This could make business ownership a
less equal opportunity for women.
Scope and Methodology
The study focused on the earnings of 76,959 women who reported that they were selfemployed in their own incorporated or unincorporated businesses. Data came from the Public Use Microdata Samples (PUMS) of the 1990 Population Census. The study compares their earnings with those of selfemployed men for the 1990 census year. Earnings differences between selfemployed men and women were then compared with earnings differences between men and women who were employees.
The researchers examined differences in characteristics that affect
earnings, such as age, education, occupation, marital status and
the presence of children. Other determinants of earnings from
business ownership could not be accounted for because they are
not recorded in the Census. Among the unmeasurable variables were
the age and size of the business from which selfemployment
earnings were derived, the quality and type of education, and
the extent of interruptions in the owner's work history. Gender
earnings differences that should be attributed to the excluded
factors can be mistakenly attributed to discrimination; therefore,
the impact of discrimination reported in this study may be overstated.
Highlights
The results show that the women in these small businesses earn less than a similar sample of men business owners, and that the gender gap for women who are selfemployed is larger than the gender gap for women employees. The larger gap for selfemployed women was consistent across many subgroups of women including married and unmarried, college educated and high school educated, those who have never had children and those who have had children.
Ordering Information
The complete report is available from:
National Technical Information Service
U.S. Department of Commerce
5285 Port Royal Road
Springfield, VA 22161
(703) 487-4650
(703) 487-4639 (TDD)
Order Number: PB95187365
Cost: A04; A01 Microf.
*Last Modified 6-11-01