The gender wage gap and its effect on women's entrepreneurship

We demonstrate an inverse relationship between women's financial equality status with men (as proxied by gender wage gap), and women's entrepreneurship participation at the U.S. state level. Gender wage gap affects women's opportunity cost of the entrepreneurship decision. In states where women's status is lower, women's opportunity cost of becoming an entrepreneur is lower because their wages are lower, increasing women's entrepreneurship participation. We also demonstrate that states' demographics are important factors, but only education is specific to women. Collectively, we find that women choose to be entrepreneurial when their status is lower, which reflects women's economic resiliency.