Labor laws that prevent women from moving up in the workplace may actually encourage them to start more businesses. But the businesses they start are not as profitable as the businesses run by women in countries with more generous benefits geared towards helping families deal with childcare.

That’s according to newly-released research by Sarah Thébaud, a professor of sociology at the University of California at Santa Barbara. In her report, Thébaud rejects the premise that family law should pit business advocates against big government liberals. The inflexibility of the modern workplace deters half of the nation’s population from fully engaging in entrepreneurship, a trend that should make any free market enthusiast concerned, she argues.

“(W)omen are a vastly under-tapped resource when it comes to growing a vibrant economy,” she writes. “For instance, in 2014, woman-owned firms in the United States employed only six percent of the workforce and created less than four percent of all business revenues — a figure that is about the same as it was in 1997.”

In countries in which the state does not spend substantially on childcare, such as the U.S. and Canada, women are more likely to start businesses than in countries that have generous benefits, such as Denmark. That suggests to Thébaud that American women, for instance, may seek self-employment as a way to escape the inflexibility of salaried work.

The bad news, however, is that women-run businesses in the U.S. tend to be more conservative and less likely to yield high-growth, according to the study. In fact, women-owned businesses are struggling more now than in the past.

“Where supportive work-family policies are not present, women are more likely to pursue entrepreneurship as a fallback employment strategy rather than an active choice,” she wrote.

She concludes that the U.S. needs to reexamine its work policies to encourage women to pursue more opportunities as both workers and entrepreneurs.

“(L)et’s work toward policies that expand the menu of options for women workers — and therefore promote entrepreneurship as an opportunity-driven choice — rather than policies that limit these options

Instant Insights /

Women-owned businesses less profitable in U.S.

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