Gender in Bolivian Production : Reducing Differences in Formality and Productivity of Firms
A main goal of this study is to determine the variables responsible for the lower formality of women-owned businesses. The companion study (the World Bank 2007a) shows that Bolivia's informal sector is the largest in Latin America by many definitions and measures. It also provides a rationale for promoting formality given the many negative effects of a high rate of informality. These negative effects include a lower growth potential as informal firms tend to be less productive owing to limited access to physical, financial, and human capital, and a smaller scale of operations; negative fiscal impacts as informal firms "free ride" on services provided with fiscal resources; and negative social externalities, including weaker rule of law and public institutions, increased corruption, and weakened ability to enforce contracts. A second goal of this study is to identify gender-based productivity constraints that hinder the growth of female-owned businesses. First, author's analysis of the impact of formality on profitability shows that the gains of formalization for most female-owned businesses increase as the firms grow. Second, author's find that the smaller scale of operation of female-owned firms is one of the main causes of gender-based differences in productivity and profitability. However, most of the differences between male and female-owned firms diminish or disappear as firms grow.
Summary: | A main goal of this study is to
determine the variables responsible for the lower formality
of women-owned businesses. The companion study (the World
Bank 2007a) shows that Bolivia's informal sector is the
largest in Latin America by many definitions and measures.
It also provides a rationale for promoting formality given
the many negative effects of a high rate of informality.
These negative effects include a lower growth potential as
informal firms tend to be less productive owing to limited
access to physical, financial, and human capital, and a
smaller scale of operations; negative fiscal impacts as
informal firms "free ride" on services provided
with fiscal resources; and negative social externalities,
including weaker rule of law and public institutions,
increased corruption, and weakened ability to enforce
contracts. A second goal of this study is to identify
gender-based productivity constraints that hinder the growth
of female-owned businesses. First, author's analysis of
the impact of formality on profitability shows that the
gains of formalization for most female-owned businesses
increase as the firms grow. Second, author's find that
the smaller scale of operation of female-owned firms is one
of the main causes of gender-based differences in
productivity and profitability. However, most of the
differences between male and female-owned firms diminish or
disappear as firms grow. |
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