DP8204 What drives women out of entrepreneurship? The joint role of testosterone and culture

Author(s): Luigi Guiso, Aldo Rustichini
Publication Date: January 2011
Keyword(s): digit ratio, entrepreneurial ability, entrepreneurship, testosterone, women emancipation
JEL(s): D22, L21, L25, L26
Programme Areas: Financial Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=8204

The ratio of second to fourth digit (2D4D) has been shown to correlate negatively with entrepreneurial skills and financial success. We document that in a sample of entrepreneurs women have a lower 2D4D ratio than men, in sharp contrast with the features of the distribution in random samples. Exploiting variation across communities in indices correlated with women emancipation, we show that in regions where women are less emancipated their average DR is lower than that of men compared to regions with higher indices. This finding is consistent with the existence of gender related obstacles into entrepreneurship so that only women with well above average entrepreneurial skills find it attractive to self-select into entrepreneurship. This finding can rationalize three facts: a) fewer women than men are entrepreneurs; b) the proportion of women among entrepreneurs tends to be higher in countries with higher women emancipation; c) women who break the barrier into entrepreneurship seem to show more masculine traits. We also find that once women enter entrepreneurship, they are equally able than man to translate their ability into outcomes for the firm.