What do Gender Specific Indicators Tell Us About the Business Environment? Sarah Iqbal April 6th, 2011 The Enabling Environment and Policy Reforms to Support Female Entrepreneurship

Why do we need gender specific indicators for the business environment? Research like the Doing Business Project has helped us to better understand the obstacles that entrepreneurs in general face when it comes to starting businesses and getting jobs. But this research misses an important piece of the puzzle when it comes to examining entrepreneurship: women’s entrepreneurship. Legal obstacles to women’s entrepreneurship do not arise from business laws and regulations Rather, such obstacles may arise from marriage and family laws that limit women’s legal capacity or their ability to manage and control property

How do laws limit women’s autonomy? Lack of autonomy to interact with government institutions or conduct official transactions may limit women’s access to services, restricting their ability to freely function in the business environment Restrictions on freedom of movement hamper access to entrepreneurial activities, as do head of household requirements which bar women from becoming the legal head of household Often marriage is the trigger that limits women’s individual autonomy because married women can be subject to additional approval requirements to conduct business transactions, or must meet higher legal standards to get the same treatment as men For example married women may pay higher taxes than married men on the same income because married women cannot claim deductions for their husbands and children in the same way that married men can 3

Property rights and family law Access to property can be especially important when it comes to financing entrepreneurial activities as property functions as collateral for loans. When established credit histories are lacking, and women do not have access to personal sources of financing, access to property may be their only way to get start up capital The default marital property regime establishes how the management and control of property is set up within the family. Where the default marital property regime sets up unequal management and control of marital property, women may not be able to use property that they actually own Inheritance law may also limit women’s ability to inherit family property, e.g., leaving the widow with land use rights rather than full ownership rights, or disallowing married daughters from inheriting property 4

5 Results from Women, Business and the Law Equal Rights for men and women are associated with more businesses run or owned by women Source: Women, Business and the Law and Enterprise Surveys

6 Laws are changing for the better Laws are changing to increase gender equality Increases in joint titling for married couples in Vietnam India’s amendment of the Hindu Succession Act to give women inheritance rights over joint family property Korea’s decision to disallow the male only family head system But there is still a long way to go…

Women and the informal sector The data suggests that women’s ownership rates of informal firms are higher than for formal firms This is largely true regardless of sector Women owned informal firms are also more likely than men owned informal firms to work from inside the home Source: Enterprise Surveys

What types of policies may help women owned firms? Policies that help home-based businesses – E.g. examining differentials in utility rates between home based small businesses and regular commercial rates Policies that help informal enterprises – E.g. examining credit registry and credit bureau rules to see if they collect and distribute information from MFI’s? Policies that help smaller firms – E.g. the existence of lower cost and more rapid forms of dispute resolution such as small claims courts

Main Messages Identify where the key legal constraints on women’s entrepreneurship are coming from Family law and the nature of the default marital property regime affect women’s decision making abilities Male only head of household requirements can restrict access to opportunities and government services for women Gender blind interventions targeted at helping smaller firms, informal firms, and home-based firms may disproportionately help women entrepreneurs

wbl.worldbank.org