April 2015

IZA DP No. 8981: The Rise of Female Entrepreneurs: New Evidence on Gender Differences in Liquidity Constraints

published in: European Economic Review, 2016, 86, 73-86

Small business activity and female entrepreneurship have become increasingly important features of the UK economy since the start of the Great Recession. In this paper, we re-examine the impact of liquidity constraints on new business formation in an instrumental variables framework, using a previously unexplored data set from the UK. The new results indicate that it is primarily single women that drive the well-established empirical relationship between personal wealth and business start-ups. Therefore, public policies specifically targeted at relieving the liquidity constraints of women could help further accelerate the rise of female entrepreneurship.