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Finding the real reasons why women earn less than men throughout the world—and how to fix it
About half of the world’s population is self-employed, and self-employed women earn only about half as much as men, according to the World Bank. Social scientists believed for years that increasing women’s access to capital would shrink the earnings gap.
But in developing countries, they found that new influxes of cash often went to shore up the businesses of men—whereas the women’s businesses more often stayed flat.
“There is no country in the world without a gender gap in earnings,” said Solène Delecourt, a Berkeley Haas assistant professor of management who studies inequality in business performance. “Women everywhere face unique constraints, and a one-size-fits-all solution sometimes can lead to positive benefits for men, but not for women.”
In three new studies, Delecourt and colleagues looked at why women-owned businesses in Uganda, Kenya, and India underperform businesses operated by men in those countries. Their findings not only include some surprises, but hold clues for specific strategies to address earnings inequality everywhere.
The “baby-profit gap” in Uganda
Delecourt teamed with Anne Fitzpatrick of the University of Massachusetts for a study on the “baby-profit gap,”published in Management Science.
Looking at data Fitzpatrick collected for an earlier study of small pharmacies in Uganda, the researchers noticed that while none of the men had children at work, about a third of the women were balancing childcare while running their businesses.
The childcare duties were taking a toll, literally: In a side-by-side analysis, the researchers found that the women who were running their businesses while taking care of their children earned less than half as much as the women without children in their stores.
“What we were seeing was unmistakable: We started to think of it as a baby-profit gap,” Delecourt said.
The study also shows how questions change—and overlooked insights emerge—when researchers with diverse backgrounds are in the field. “No one had looked at the data that way before,” Delecourt said. “We were both women expecting our second children, so perhaps that’s why we noticed the gap.”
Kenya: Location, location, location
Now Delecourt and Fitzpatrick, along with Laura Barasa of the University of Nairobi, and Layna Lowe and Anya Marchenko from UC Berkeley’s Center for Effective Global Action, are crunching data for another study on women’s business performance in Kenya.
The researchers compared the differences in earnings between men and women owners of about 2,000 small stores in Western Kenya, where women on average earn 75% less than men. While stressing that their findings aren’t causal, the researchers were able to trace 12% of the wage gap to one source: location. The stores run by women were almost always sited in less-desirable spots, typically farther from busy town centers. Some women were running home-based businesses, which averaged about 30% fewer customers.
The suspected reasons are firmly rooted in gender roles.
“The women tell us they want to be closer to home; they’re concerned about safety getting home after dark and worry whether their husbands will suspect them of having affairs if they’re late,” Delecourt said. The women also said working at home makes it easier to balance competing demands of home and work-life, such as childcare or chores.
“Gendered constraints at the intersection of family and the marketplace contribute to gender inequality in business performance,” the researchers concluded.
A novel experiment in Jaipur, India
The results of a third study didn’t just surprise Delecourt—they shocked her.
Focusing on the market in Jaipur, India, Delecourt and Odyssia Ng of the World Bank wanted to find out whether buyer behavior was contributing to the wage gap. Were buyers more reluctant to purchase from women? They expected the answer to be yes.
They constructed a field experiment that not only shows women’s earning power, but gives new meaning to the words “intrepid researchers.” They battled predawn inventory runs, rogue goats, and hungry rats who munched on the produce purchased for the experiment. Ng even came down with dengue fever.
In the end, they had six stores in prime locations, with identical inventories. They hired 282 sellers from the market—half of them women, half men—to come and run the businesses for a day.
They found that given the choice of equally attractive options, buyers did not select shops based on the proprietors’ gender. Male buyers were just as likely to buy from a female shop owner as women were to buy from a male shop owner.
“What we saw dispels so much of the bias about women in business,” said Delecourt. “If women are given the same business—in this case a functioning, well-stocked, well-located store—then their stores perform as well as men’s.”
Learn more about the study in this podcast interview with Delecourt:
Targeted solutions
Everyone pays a price for the constraints on women’s earning power, Delecourt believes. Less money for families means fewer opportunities for children. And suppressing women’s earning potential has an outsized impact on the aggregate economies of their countries.
Delecourt’s research suggests that targeted solutions to address known barriers could pave the way for further change. In Uganda, providing day-care support could open up earnings for women. In Kenya, better store locations may be a game changer.
Adjusted for cultural and social differences, these findings also underscore that while women globally face similar constraints, the solutions can’t be cookie-cutter.
“While my colleagues and I have been focusing on developing countries, we know day care is cited as one of the top reasons why women have been leaving the work force here in the U.S. during the pandemic,” Delecourt said. “Women face constraints due to their gender everywhere in the world. Bridging the gender gap requires a thorough understanding of women’s unique challenges in their specific context.”
Startup KwikKart nabs first prize at LAUNCH Demo Day
Three Berkeley Haas startups nabbed top honors at Demo Day for LAUNCH, the University of California’s accelerator for early stage startups.
The event, organized by Haas and UC Berkeley students and sponsored by the Berkeley Haas Entrepreneurship Program (BHEP), was held online on Friday, Jan. 14.
KwikKart, a smart cart that allows customers to scan and purchase items from a smartphone while shopping, took first place; The Blue Box, an at-home urine test that can detect breast cancer, placed second; and PWR WMN, a women’s blazer company, nabbed third. Cleo, a THC and CBD gummy startup, won Audience Choice.
Eight out of the 14 teams that completed the three month accelerator program made it to the finals, where they pitched to VCs and angel investors. LAUNCH, now its 7th year as an accelerator, aims to transform early-stage startups into fundable companies.
Rhonda Shrader, executive director of BHEP, which oversees LAUNCH, said this fall’s cohort was exceptionally diverse, with eight underrepresented founders and 11 women founders. “Every year our cohorts get more diverse and reflect more diverse thinking around solving the world’s biggest challenges,” she said.
KwikKart, co-founded by Aaron Gyure, BS 20, and Sean Houlihan, BS 20 (electrical engineering and computer science), netted $25,000 in prize money; PWR WMN, led by two Texas A&M University grads and Ana Martinez, EWMBA 23, won $10,000; and Cleo, co-founded by Haas students Andrea Berrios and Spencer Perron, both MBA 22, landed $5,000 in prize money. The Blue Box, led by UC Irvine grad Judit Giro, won $15,000.
Each year, more than 200 startup teams, which must include one UC-affiliated member, apply for a coveted spot in the accelerator. During the program, teams get to test their products with customers, connect with industry experts, receive guidance from Haas mentors, and get the chance to pitch to investors on Demo Day.
LAUNCH has helped build more than 150 companies, including Haas’ first unicorn, Xendit, co-founded by Moses Lo, MBA 15. Lo, who joined Demo Day for a Q&A, spoke about his entrepreneurial successes and challenges.
LAUNCH Demo Day is now available to stream via YouTube.
Meet the Berkeley Haas MBA class of 2023
Meet the MBA class of 2023: Edson Flores, U.C. Berkeley (Haas)
Meet the MBA class of 2023: Nga Le, U.C. Berkeley (Haas)
“Collaboration is the key word:” Venture capital’s rise at Haas
On a recent rainy night, more than 100 Berkeley Haas and Stanford GSB students convened in Chou Hall’s Spieker Forum for a first-of-its-kind Founder-Investor Mixer.
Haas MBA students Atusa Sadeghi and Alejandra (Ale) Vergara, along with Dogakan Toka, EWMBA 22 and co-president of the Berkeley Entrepreneurship Association (BEA), were behind the event. As co-presidents of the Haas Venture Capital Club, they decided it was time for students from the two programs to get to know each other in the tight-knit industry, where they’d inevitably run into each other post-graduation.
“I think collaboration is the key word here,” said Sadeghi, EWMBA 22, a former mechanical engineer who transitioned into venture capital over the last two years. “If we’re going to be in the same industry, let’s be united.”
A new fund
That shared vision for unity among investors and entrepreneurs is something Sadeghi and Vergara, full-time MBA 22, have emphasized since taking on their roles amid the Covid pandemic. Under their watch, they organized the event with Stanford, landing the support of sponsor First Republic Bank and Andrew Liou, a senior relationship manager at the bank, who “didn’t think twice before supporting the collaborative effort,” Vergara said.
Membership in the student-run VC club, founded in 2018 by evening & weekend MBA students Chris Truglia and Scott Graham, has increased from about 100 to more than 500 students, split 50-50 between the evening & weekend and full-time MBA programs. Since its founding, collaboration and networking among students from both the programs has been critical to the club’s success, Truglia said.
The club hosts popular pitch nights, often partnering with other UC Berkeley clubs, and has built a database with answers to the most common questions students ask about the venture capital industry. This past fall, venture capital club leadership also helped spearhead the creation of Courtyard Ventures, a new venture fund led by Haas MBA students that provides an opportunity for Cal students and alumni to invest in early-stage Cal startups. The fund has recently begun deploying capital, after exceeding funding goals and closing its first two investments in early January, Sadeghi said.
“These women are amazing—they’ve done an incredible job,” said Deepak Gupta, an investor and venture capital industry advisor with the Berkeley Haas Career Management Group.
While entrepreneurship is a well-established career path at Haas, Gupta said he’s seen a shift in student interest and effort in venture capital over the past three years, as the number of Bay Area VC funds has proliferated. “Now, these funds are coming to Haas to recruit for associate and principal roles,” said Gupta, who is also managing partner of his own pre-seed fund Blue Bear Ventures started at UC Berkeley. By next year, Gupta predicts Haas could double its number of full-time offers.
That growth would be significant. For each of the past two summers, about 15 to 20 full-time MBA students interned at venture capital firms, up from just a few in 2015, said William Rindfuss, executive director of strategic programs in the Haas Finance Group. While there’s a longer track record of students studying finance going into investment banking, a total of around 10 grads took full-time jobs in venture capital over the past two years. “We’ve had more students doing VC internships, and that will likely lead to more full-time VC job offers,” Rindfuss said.
The passion for investing
But increased hiring comes down to overcoming challenges endemic to the venture capital industry. VC funds can be insular, they don’t hire on a predictable schedule, and entry-level pay can be low compared to other finance jobs—with a big payoff delayed until you make partner, Gupta said.
“Venture is so ‘just in time’ and when people hire you you start immediately. It’s not like consulting where you get your offer and start next July,” said Jeff Diamond, MBA 22, a VC Club officer and a general partner at Courtyard Ventures. But Diamond, who came to Haas to switch from a career in the entertainment industry to early-stage investing, said he’s committed to a VC career. “It’s a lot of work but it’s rewarding,” he said. “It’s what I liked about working with artists, writers, and directors. You want to be the person who works with them. The idea of being with these companies for the long haul is what interests me.”
“The idea of being with these companies for the long haul is what interests me.” — Jeff Diamond, MBA 22
There’s clearly passion for investing in the Haas alumni network, which is expanding to include graduates like Sydney Thomas, MBA 16, a principal at seed-stage fund Precursor Ventures; Matthew Divack, MBA 19, an investor at Moment Ventures, and Champ Suthipongchai, MBA 15, who co-founded Creative Ventures, a tech VC firm investing in startups that address the impact of increasing labor shortages, rising healthcare costs, and the climate crisis.
Making alumni connections
An earlier success story in venture capital, Michael Berolzheimer, MBA 07, founded Bee Partners in 2008. An internship at pre-seed fund Bee Partners piqued Vergara’s interest last year, but she worried she lacked a technical background. Then Vergara met Kira Noodleman, MBA 17, a partner at Bee, through the Berkeley Female Founder and Funder’s summit last year. “Kira encouraged me to apply,” said Vergara, who landed the internship. That led to a full-time job offer with the fund when she graduates in May.
Looking for more investment experience, Sadeghi found her internship as a senior venture associate at Blue Bear Capital (separate from Gupta’s fund, Blue Bear Ventures). She first met Carolin Funk, a Blue Bear partner invited by the 2020 Haas Venture Capital Club to speak at the school. Interviews at Blue Bear led to an offer. She then learned that recent alum André Chabaneix, MBA 21, already worked at Blue Bear as a senior associate.
“André is just amazing,” Sadeghi said. “We have a lot in common in terms of our background and industry interest so we bonded pretty quickly. In our overlapping year at Haas we participated in the 2021 Venture Capital Investment Competition (VCIC) where we ended up representing Berkeley at the global finals together—and now we’re great friends and colleagues.”
While students continue their internship and career recruitment this spring, the VC Club already has many events planned, including club-sponsored workshops, student-alumni mixer events and more collaboration with peer MBA programs. Vergara and Sadhegi encouraged students “who are just interested in learning more about VC or are fully committed to this career path,” to check out the club.
“It’s been such a pleasure running the 2021 VC club year with Ale, and we can’t wait to welcome the 2022 leadership team to carry us forward,” Sadhegi said.
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‘Driven by our own mission’: Blackbook University builds community and belonging
As an undergraduate, Ibrahim Baldé, BS 20, said he faced many challenges on top of managing a rigorous course load. They included battling imposter syndrome, experiencing microaggressions from peers, and feeling pressured in class to be the spokesperson for his race as he was often the lone Black student.
After speaking with friends and classmates who also identified as Black, Baldé learned that they faced the same hurdles. A 2019 campus-climate report published by UC Berkeley’s Division of Equity, and Inclusion also confirmed Baldé’s experience, which found that many Black students experienced exclusionary behaviors from peers, including being stared at or singled out to represent their race.
Wanting to improve the Black student experience at Berkeley, Baldé co-founded Blackbook University, a website and mobile app that provides educational and professional resources to help Black undergraduate and graduate students navigate their journey at Berkeley. Blackbook’s other co-founders include Nicholas Brathwaite, Chase Ali-Watkins, both BA 20, Nahom Solomon, BA 21, Farhiya Ali and Imran Sekalala, both BA 23.
The app, which launched Nov. 18 and is a revival of a Black student handbook published in the 1980s and 1990s, includes a calendar with extracurricular and career-related events, a student-alumni-faculty directory, a live chat feed for users to interact, and a scholarship and internship database. The website features student profiles and an internship program for students interested in entrepreneurship and tech.
Brathwaite manages product development, Ali and Sekalala handle data analysis and design, Solomon serves as the director of operations, Ali-Watkins is the chief marketing officer, and Baldé is CEO.
Student Profile – Adaeze Noble from Made By Chase on Vimeo.
The journey
The son of an imam, Baldé was instilled with a “beyond yourself” mindset at an early age. Growing up in Alameda, Calif., Baldé knew that he wanted to combine his three passions: social impact work, business, and tech. Once at Haas, Baldé took Haas Lecturer Alex Budak’s leadership class called Becoming a Changemaker.
“That class allowed me to think about my mission and purpose and to understand that leadership isn’t a defined trait,” Baldé said.
Following that class, Baldé began to lay the groundwork for Blackbook University. He teamed up with his co-founders and formed an advisory board of faculty and staff across campus, including Budak, Marco Lindsey, associate director of Diversity, Equity, and Inclusion at Haas; Miya Hayes, BA 92, associate director of Campus Partnerships & Engagement; and staff from the African American Student Development Office.
Baldé surveyed about 150 Black Berkeley and Haas students to assess if he had a winning idea. The answer was a resounding yes.
While Slack and GroupMe are useful networking tools, 90% of surveyors reported that it was important to have a tool that was designed for them.
“Students can’t take ownership of Slack and GroupMe, but they can take ownership of Blackbook,” Baldé said.
Successes and challenges
Baldé and his team have had some successes. They participated in UC Berkeley’s Free Ventures pre-seed accelerator, allowing them to test and tweak their business model. They also were one of the Big Ideas Contest grand prize winners, earning $10,000 in prize money.
But they’ve also had some setbacks, including finding the best developer who could deliver the app they envisioned. Another setback was validating their business model to potential investors. Currently, Blackbook is free to download.
“We just tune out the noise,” Baldé says. “We’re driven by our own mission and that is to build community and to make our resources and networks available to Black student communities.”
Despite the hurdles, the team continues to press on. Their goal is to make customized versions of the app for Black student communities at colleges and universities nationwide.
Faculty and staff advisors praise Baldé and his team for creating a sense of belonging on campus.
“I’m inspired by how Ibrahim can readily imagine a better future and then rally the people and resources needed to turn these ideas into reality,” said Budak. “We talked about how one of the greatest acts of changemaking is creating the opportunities for others that we wish we had for ourselves and Ibrahim is doing just that.”
Hayes agreed. “I’m in awe of their innovation–taking both the best and most challenging aspects of their time at Berkeley to create something that sustains and nourishes our sense of belonging,” she said. “They’re giants in their own right.”