Despite recent gains, women still lag behind men on key measures of start-up activity, and their firms tend not to grow or prosper as much. The Kauffman Foundation reports on how we can better tap into this under-utilized economic resource.
Resource Category: Economics (General)
Jobs, Infrastructure & the Workforce
California, and the nation as a whole, still can seize economic opportunities, but only if both overcome these multiplying sets of challenges – challenges made even tougher by the ongoing economic downturn and lingering effects from the “Great Recession.”
Structure of Nonfinancial Industries
We exploit variation in commercial bank capital ratios across states to identify the impact of higher capital ratios on firm creation and size in the manufacturing industries. We control for omitted financial and nonfinancial variables that may affect firm dynamics by exploiting variation in external finance dependence across industries. Our panel regressions suggest that, for industries dependent on external finance, a percentage point increase in the capital ratio has no statistically significant effect on firm creation but leads to a decline in average firm size, as measured in employees, of 0.7 to 1.4 percent the following year and a decline of 4 to 6 percent in the long term. The number of firms might not necessarily decline in response to more limited access to finance as setting up a business may not be that costly and some of the displaced workers may actually establish new businesses. Our results highlight the potential effects that tightening capital adequacy standards, such as Basel III, may have on firm dynamics in the industries dependent on external finance.
Small Businesses in Recent Recoveries
Small businesses play a vital role in the U.S. economy. These firms produce half of private GDP, employ half the private workforce, and are the source of most job creation in the U.S., accounting for roughly two-thirds of new net private sector jobs over the past two decades.1 The importance of small firms to production and job creation makes their health fundamental to economic growth. Data from the National Federation of Independent Business’s (NFIB) 350,000 member businesses indicate that in the current recovery period, these firms are suffering from unusually low levels of sales and earnings, investing less, and hiring fewer workers than in previous recoveries, exacerbating the nation’s unemployment situation and contributing to a lackluster rebound from the most severe U.S. recession since the Great Depression. Statistics on the small business sector are not readily available, but the NFIB data suggest that this sector is dramatically underperforming. Because half of the economy is not growing, we have not enjoyed the kind of growth experienced in past recoveries.
CDFI Growth & Sustainability
This report will increase our understanding of challenges CDFIs face at different points in their development.
Capital Availability in Inner Cities
In this paper, we examine a key driver of business success—access to financial capital—and discuss current and potential roles of federal policy in ensuring access to capital for inner-city businesses. Access to capital has historically been a problem in low-to-moderate income (LMI) areas, illustrated most extremely in so-called “redlining,” a term coined in the 1960s to describe the practice of refusing to make loans or write insurance policies based on neighborhood characteristics, rather than merits of would-be borrowers. While this practice is illegal, the persistence of the “capital gap” has become a contentious issue among researchers, practitioners, and policymakers. Some believe that major regulatory efforts focused on improving credit access in LMI areas, such as the Community Reinvestment Act (CRA), have rendered the capital gap a problem of the past. Others believe that despite significant improvements, large barriers continue to exist, creating a shortage of capital for even investment-worthy inner city businesses. Resolving this debate is critical for designing appropriate public and private sector responses to the anemic economic performance in inner cities.
Startups in Job Creation and Destruction
Without start-ups, there would be no net job growth in the U.S. economy. This fact is true on average, but also is true for all but seven years for which the United States has data going back to 1977.
Women Entrepreneurs Worldwide
This Global Entrepreneurship Monitor report seeks to understand global differences in the frequency and nature of women’s entrepreneurship, and makes comparisons with men across various societies.
Impact of Women-Owned Businesses
For the first time, the Center for Women’s Business Research has utilized a methodology to measure the economic impact of the estimated 8 million U.S. businesses currently majority women-owned. Today, women-owned firms have an economic impact of $3 trillion annually that translates into the creation and/or maintenance of more than 23 million jobs – 16 percent of all U.S. jobs! These jobs not only sustain the individual worker but contribute to the economic security of their families, the economic vitality of their communities and the nation.
Minority Women Businesses Growing Fast
The Center for Women’s Business Research found that businesses owned by African American, Asian, and Hispanic women business owners substantially outpace all U.S. firms in the growth of revenues and number of employees.