The Social Mobility Equation
How access to finance can play a significant role in enabling entrepreneurship for women.
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In the research industry, gender has been a blindspot when accounting for those factors that shape economic opportunities for women.
For example, research on intergenerational earnings has traditionally been based on analysis of the relationship between fathers and sons.
To better capture gender differences the Organization for Economic Co-operation and Development (OECD)—an international non-profit that works to build better policies for better lives—did a study about inequality of opportunity.
In the study’s methodology, researchers adjusted the metrics to shift the focus from household income to individual earnings.
And this small tweak told a very different story about how opportunities vary between women and men.
“When focusing on individuals rather than households, gender emerged as the main driver of inequality of opportunity,” write the report authors.
The study found that, on average across the OECD, single men hold approximately USD 43,000 (around EUR 37,000) more wealth than single women.
When it came to wealth accumulation and access to economic opportunities, women were found to have lower access to credit and financial resources and to face a higher risk of economic insecurity.
This, says the OECD, limits women’s capacity to realize economic opportunities, including entrepreneurship and business creation.
“Women are generally less likely to successfully secure debt and equity financing than men and, when they do, they typically receive less funding, pay higher interest rates and are required to provide more collateral.”
To narrow the gender gap in entrepreneurial finance, the OECD says government-backed loan guarantees for women-owned businesses can reduce the perceived risk for financial institutions.
To this end, the OECD says governments should address barriers for women entrepreneurs to financial markets on both the supply and demand sides.
The authors pointed to the under-representation of female decision makers and mismatch of financial products and services on the supply side, and the low levels of financial literacy on the demand side.
“In this respect, increased access to finance through microfinance, fintech and direct investment can play a significant role in promoting greater entrepreneurship among women.”
The report To Have and Have Not – How to Bridge the Gap in Opportunities can be downloaded here.
D.L. Lee is the author of SISTERLY LOVE, a novel about two sisters who grow apart.
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