Institutional protection of minority employees and entrepreneurship: Evidence from the LGBT Employment Non-Discrimination Acts

A diverse workforce has long been associated with multiple firm benefits, but this is sometimes difficult to achieve due to employer discrimination. Although multiple institutional arrangements have been put in place to ban discriminatory behavior, the effects of such regulations remain relatively unexplored, often neglecting start-ups. We propose that institutional changes aiming to outlaw employment discrimination will trigger two main effects: they will (a) depress start-up founding rates through enhancement of wage-work appeal, and (b) increase the average start-up quality due to a higher threshold for leaving wage-work. We test our predictions by exploiting the staggered enactment of Employment Non-Discrimination Acts in the U.S. Consistent with our theory, we find that this institutional protection reduced the quantity of entrepreneurship but increased its quality

Discrimination and entrepreneurship: evidence from LGBT rights laws

This study revisits the well-established claim that reducing discrimination spurs entrepreneurial entry. We propose that the effect of antidiscrimination initiatives on entrepreneurship depends crucially on whether discrimination originates on the demand- or the supply-side of the entrepreneurial process. The benefits of antidiscrimination practices in the context of entry are based on the study of the demand-side discrimination, or bias which arises when prospective entrepreneurs face discrimination by key resource providers for a new venture (i.e., investors, banks, prospective employers). We hypothesize the opposite effect on the supply-side, or when prospective entrepreneurs face discrimination in paid employment. Using evidence from the enactment of LGBT antidiscrimination policies, we show that initiatives to reduce employer discrimination deter entry into entrepreneurship because they increase the appeal of paid employment relative to entrepreneurship. Despite the reduction in the rates of entrepreneurship, however, new ventures growth orientation increases because antidiscrimination policies motivate the pursuit of higher-potential opportunities.info:eu-repo/semantics/publishedVersio

Gender Gap in Entrepreneurship

Using data on the entire population of businesses registered in the states of California and Massachusetts between 1995 and 2011, we decompose the well-established gender gap in entrepreneurship. We show that female-led ventures are 63 percentage points less likely than male-led ventures to obtain external funding (i.e., venture capital). The most significant portion of the gap (65 percent) stems from gender differences in initial startup orientation, with women being less likely to found ventures that signal growth potential to external investors. However, the residual gap is as much as 35 percent and much of this disparity likely reflects investors’ gendered preferences. Consistent with theories of statistical discrimination, the residual gap diminishes significantly when stronger signals of growth are available to investors for comparable female- and male-led ventures or when focal investors appear to be more sophisticated. Finally, conditional on the reception of external funds (i.e., venture capital), women and men are equally likely to achieve exit outcomes, through IPOs or acquisitions

Vertical and horizontal wage inequality and mobility outcomes : evidence from the swedish microdata

Using employer–employee matched data from Sweden between 2001 and 2008, we test hypotheses designed to assess the contingent nature of the relationship between wage inequality and cross-firm mobility. Whereas past research has mostly established that wage inequality increases inter-firm mobility, we investigate the conditions under which pay variance might have an opposite effect, serving to retain workers. We propose that the effect of wage inequality is contingent on organizational rank and that it depends on whether wages are dispersed vertically (between job levels) or horizontally (within the same job level). We find that vertical wage inequality suppresses cross-firm mobility because it is associated with outcomes beneficial for employees, such as attractive advancement opportunities. In contrast, horizontal wage dispersion increases cross-firm mobility because it is associated with outcomes harmful for employees, such as inequity concerns or job dissatisfaction. We further find that the vertical-inequality effect is amplified (mitigated) for bottom (top) different-level wage earners, consistent with the notion that bottom wage earners have the most to gain from climbing job ladders. Similarly, the horizontalinequality effect is amplified (mitigated) for bottom (top) same-level wage earners, consistent with the notion that bottom wage earners are most subject to negative consequences of this inequality. More broadly, the study contributes to our understanding of the relationship  between wage inequality and cross-firm mobility