The Motherhood Wage Penalty and Female Entrepreneurship

Yang, Tiantian, Kacperczyk, A and Naldi, Lucia (2024) The Motherhood Wage Penalty and Female Entrepreneurship. Organization Science, 35 (1). pp. 27-51. ISSN 1047-7039

Abstract

The need to resolve work–family conflict has long been considered a central motive for women’s pursuit of entrepreneurship. In this paper, we propose and empirically uncover a novel mechanism driving female entrepreneurship: reduced earnings opportunities in wage employment due to motherhood status. Combining insights from career mobility research and the motherhood penalty literature, we propose that women who become mothers will disproportionately launch a new business to reduce the motherhood penalty they would otherwise incur in wage work due to employer discrimination. We further predict that this tendency to launch a new venture will be more pronounced for women who occupy high-paying or managerial positions, given the higher opportunity cost of staying in wage work and the higher potential payoffs from entrepreneurship that accrue mothers occupying such positions. Using matched employer–employee data from Sweden that distinguish new-venture founding from self-employment, we find support for our arguments. Overall, this study sheds light on the two antecedents of female entrepreneurship and contributes to a more thorough understanding of what motivates women to pursue irregular and atypical careers, such as entrepreneurship. Funding: This work was supported by the Ewing Marion Kauffman Foundation (Ewing Marion Kauffman Junior Faculty Fellowship) and the Wharton Dean’s Research Fund. Supplemental Material: The e-companion is available at https://doi.org/10.1287/orsc.2023.1657 .

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Item Type: Article
Subject Areas: Strategy and Entrepreneurship
Additional Information:

Tiantian Yang, Aleksandra (Olenka) Kacperczyk, Lucia Naldi (2023) The Motherhood Wage Penalty and Female Entrepreneurship. Organization Science
https://doi.org/10.1287/orsc.2023.1657

Date Deposited: 04 Apr 2023 15:25
Subjects: Self-employed persons
Entrepreneurs
Careers
Last Modified: 30 May 2024 02:00
URI: https://lbsresearch.london.edu/id/eprint/2809
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