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Using a large nationally representative dataset covering informal sector firms in India for 2010–2011 and 2015–2016, this study aims to understand the sources of productivity gaps through a gender lens. We use several econometric tools including Exogenous Switching Treatment Effect Regression and Recentered Influence Function Decomposition methods that account for both actual and counterfactual scenarios to capture the role of gender on productivity. We observe a stark entrepreneurial divide, with only one female-owned firm for every eight male-owned firms. Our analysis confirms a substantial productivity gap: female-owned firms are, on average, significantly less productive than their male counterparts. Both differences in firm attributes and their associated returns contribute to this disparity, with the latter accounting for a major share. Our finding that male ownership is associated with higher productivity suggest that female-owned firms could attain higher productivity had they operated under the same conditions as male-owned firms. However, achieving parity in observed characteristics and returns does not fully close the gap, indicating the role of structural and cultural barriers in perpetuating gender disparities in India. From a policy perspective, recognizing and addressing these underlying barriers is crucial to reducing the gender productivity gap and fostering a more equitable business environment.
Chhetri et al. (Wed,) studied this question.