Are liquidity constraints holding women back? An analysis of gender in self-employment earnings

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Résumé (français)

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Résumé (anglais)

In Canada, the 1999 mean self-employment earnings for women is $22995 compared with $38350 for men (Devlin, 2001). The majority of this earnings gap is unexplained. In this paper, I investigate liquidity constraints as a potential determinant of the gender gap. Consistent with Hurst and Lusardi (2004) I find that the relationship between liquidity and self-employment is non-linear. Furthermore, the non-linearity is asymmetric across gender. In particular, women’s earnings are affected at lower levels of liquidity. Using a baseline specification, I estimate that over 95 percent of the earnings gap would be eliminated in the absence of liquidity constraints.