Does Gender Matter for Small Business Performance? Experimental Evidence from India

Many well-known studies have shown that female-owned micro-enterprises are less profitable and have lower returns to capital than their male counterparts. This raises an important question: what drives the estimated gender gap in business performance? We examine this question in the context of vegetable sellers in Jaipur, India, a context where observationally women make less than men. We conduct two field experiments that keep every business aspect the same except for the gender of the owner. More specifically, we set up our own shops so that location, goods supplied, and hours of operation are held constant. In Experiment 1, we isolate demand-side constraints by training confederate sellers to sell packaged goods at fixed prices using a standardized script, thereby additionally controlling for seller behavior. In Experiment 2, we only control for supply-side characteristics. In both experiments, we find that women earn at least as much as men. Our results demonstrate that the estimated gender earnings gap in this context is not due to differential demand-side constraints or seller behavior, but instead is likely driven by differences in capital.