Labor market regulation and gendered entrepreneurship: a cross-national perspective

• Published in: Small business economics 2024-02, Vol.62 (2), p.687-706
• Main Authors: Angulo-Guerrero, María J., Bárcena-Martín, Elena, Medina-Claros, Samuel, Pérez-Moreno, Salvador
• Format: Article
• Language: English
• Subjects: Business and Management; Comparative studies; Developing countries; Economic development; Economics; Entrepreneurs; Entrepreneurship; Females; Feminist theory; Flexibility; Gender differences; High income; Hiring; Income; Industrial Organization; Labor market; LDCs; Management; Microeconomics; Minimum wage; Opportunity costs; Panel data; Policy making; Regulation; Research Article; Risk; Risk aversion; Ventures; Working hours
• ISSN: 0921-898X; 1573-0913
• DOI: 10.1007/s11187-023-00776-0

This research examines the extent to which labor regulatory context matters for entrepreneurial activity under a gender perspective, using institutional economics and feminist theories as the analytical framework. We conduct a panel data analysis for 86 countries during the period 2004–2018 by differentiating between high-income and developing economies. Our findings highlight that while the links between labor regulation and entrepreneurial activity seem negligible in high-income economies, in developing economies labor flexibility is closely associated with female entrepreneurship. However, unlike the market-oriented view on the positive association between labor market flexibility and entrepreneurship, our results point out that in these economies more flexible labor regulation is related to lower early-stage female entrepreneurial activity, even though this relationship tends to vanish as the level of economic development of the country increases. This study contributes theoretically, helping to advance the analysis of gender differences in entrepreneurial activity from an institutional approach, and practically, providing evidence to policy makers on possible gender differences in the application of country-level labor market regulation in terms of entrepreneurial activity. Plain English Summary Our analysis reveals that the application of labor regulation, apparently formulated in a gender-neutral manner, might lead to gender differences in entrepreneurial activity, especially in developing countries. We find that the link between labor market regulation and entrepreneurship tend to weaken for men and women as the country’s level of economic development increases, becoming negligible in high-income countries. However, in developing countries more flexible labor regulation is closely related to lower female early-stage entrepreneurial activity. This is because women’s greater opportunity costs and risk aversion, along with gender biases that usually characterize labor markets in numerous developing economies, might prevent them from taking advantage of their capabilities and opportunities for new ventures. Consequently, improving labor regulation in these countries in aspects such as minimum wages, laws inhibiting layoffs, severity requirements, and restraints on hiring and hours worked might be particularly advisable in terms of female entrepreneurship, rather than the traditional prescription of increasing labor flexibility suggested by the liberal