The effect of female leadership on contracting from Capitol Hill to Main Street
Do female politicians alleviate barriers faced by women-owned-businesses (WOBs)? It is well established that WOBs are underrepresented in the economy relative to the share of women in society, 36% versus 50%. More strikingly, this under-representation is by an order of magnitude bigger within government procurement: only 9% of government contracts were allocated to WOBs between […]
Jonathan Brogaard is the Kendall D. Garff Chaired Professor in the Finance department at the University of Utah’s David Eccles School of Business. Nataliya Gerasimova is an Associate Professor of Finance at the Norwegian Business School. Maximilian Rohrer is an Assistant Professor of Finance at the Norwegian School of Economics. The post is based on their article published in the Journal of Financial Economics.
Do female politicians alleviate barriers faced by women-owned-businesses (WOBs)?
It is well established that WOBs are underrepresented in the economy relative to the share of women in society, 36% versus 50%. More strikingly, this under-representation is by an order of magnitude bigger within government procurement: only 9% of government contracts were allocated to WOBs between 2008 and 2020. Receiving government contracts has been linked to long-run success, employment growth, and reducing financial frictions for small firms. Hence, alleviating barriers faced by WOBs in government contracting will increase their economic potential.
The main contribution of this paper is to identify a novel channel how female politicians reduced barriers faced by WOBs, namely increased allocation of government contracts. We establish causality by exploiting a regression discontinuity design around mixed-gender elections.
