How Intra-Household Bargaining Power Affects Female Entrepreneurship?

Women’s weak bargaining power against spouses can be a hurdle to their entrepreneurship opportunities. By utilizing the state- and time-varying divorce laws in the U.S., we find that female entrepreneurship increases significantly when the divorce laws give women stronger bargaining power. This effect mainly comes from an increase in survival rate by existing business owners. The results are more pronounced for the more entrepreneurial-type of occupations, and among women who ex ante face a less friendly social environment. Overall, our results provide the first evidence that intra-household bargaining power can be an important but unstudied factor for female entrepreneurship.