Marta Morazzoni and Andrea Sy win EEA Young Economist Award

Their paper, “Female entrepreneurship, financial frictions and capital misallocation in the US,” has also been published in the Journal of Monetary Economics.

A photo of the two BSE alumni who wrote the award-winning paper, Marta Morazzoni and Andrea Sy, posing together at UPF Ciudatella Campus where they are both PhD candidates.
EEA Young Economist Awardees Marta Morazzoni ’18 and Andrea Sy ’18

BSE alumni Marta Morazzoni and Andrea Sy (both Economics Class of 2018) received the 2021 Young Economist Award from the European Economic Association and Unicredit Foundation for their paper, “Female entrepreneurship, financial frictions and capital misallocation in the US.”

The paper has also just been published in the Journal of Monetary Economics. (It originally appeared as a Barcelona School of Economics Working Paper.)

“New empirical evidence, highly relevant policy implications”

The EEA Young Economics award committee consisted of Philipp Kircher, Giacomo Ponzetto and Antonella Trigari. They noted that “the paper addresses an extremely important topic, offers new empirical evidence from micro-level data cleverly identifying informative moments, and builds a state-of-the-art general equilibrium model to rationalize the evidence and to provide highly relevant policy implications.”

Read the award committee’s report on the EEA website

Paper abstract

We document and quantify the effect of a gender gap in credit access on both entrepreneurship and input misallocation in the US. Female entrepreneurs are found to be more likely to face a rejection on their loan applications and to have a higher average product of capital, a sign of gender-driven capital misallocation that decreases in female-led firms’ access to finance. These results are not driven by differences in observable individual or businesses characteristics. Calibrating a heterogeneous agents model of entrepreneurship to the US economy, we show that the observed gap in credit access explains the bulk of the gender differences in capital allocation across firms. Eliminating such credit imbalance is estimated to potentially increase output by 4%, and to reduce capital misallocation by 12%.

Key findings

  • In the US, female entrepreneurs receive less business funding compared to male entrepreneurs.
  • Female-owned firms operate with lower levels of assets, resulting in gender-driven capital misallocation.
  • Female-led businesses are nonetheless relatively more profitable and have better credit risk scores.
  • Removing the gender gap in business financing is estimated to potentially increase output by 4%.

Connect with BSE authors

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Marta Morazzoni ’18 is a PhD candidate at Universitat Pompeu Fabra and BSE. She is an alum of the BSE Master’s in Economics.

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Andrea Sy ’18 is a PhD candidate at Universitat Pompeu Fabra and BSE. She is an alum of the BSE Master’s in Economics.

Gender Gap and Retirement Decisions: the Maternity Pension Supplement in Spain

Economics master project by Jorge Casanova, Horia Guias, Carlos Javier López, Andrea Salvanti, and Patrick Sewell ’21

Family graphic spray painted on pavement
Photo by Sandy Millar on Unsplash

Editor’s note: This post is part of a series showcasing BSE master projects. The project is a required component of all Master’s programs at the Barcelona School of Economics.

Abstract

Embedded in the growing governmental efforts to reduce the gender income gap, in 2016 a retirement pension supplement for mothers of at least two children was introduced in Spain. Through an Oaxaca-Blinder decomposition analysis, we find that the policy had a smaller-than-expected shrinking effect in the gender gap in retirement pensions. Using a difference-in-differences approach, we identify that the trade-off between the supplement incentivizing early retirement and the penalty this retirement modality entails in Spain is the mechanism driving this result. Finally, we developed a dynamic choice model to simulate women’s behavior under alternative versions of the policy.

Summary

Our main motivation was to analyse whether the maternity supplement proposed by the Spanish government in 2016 fostered gender equality through a reduction of the gender gap in retirement income. We decompose the average monthly retirement income for both men and women into its determinants and estimate how the gender difference in returns on pension of having two or more children changes after the policy is introduced. Our result is that the policy had a smaller-than-expected shrinking effect in the gender gap in retirement pensions, as the gender gap for regular retirement closes but the gap conditional on early retirement (i.e. below 65 years) remains unaffected.

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Figure 1: Time Series of Average Monthly Retirement Income: negative trend reverted for women retiring at 65 after the introduction of the policy but not for women retiring at an earlier age.

Using a difference-in-differences approach, we observe that the policy has a positive effect on all retirement hazard rates – i.e. the probability of retiring at a certain age, conditional on not having done so before.

One reason for the lower income effect is due to the trade-off that women face when they consider retiring before reaching the age at which they would start receiving their full retirement pension. On the one hand, early retirement increases the value of leisure, which could be especially beneficial for women with difficult working biographies. On the other hand, early retirement entails a penalty on the pension. For this group of women, early retirement reduces this penalty and hence, changes the trade-off in favour of early retirement, making the substitution of retirement income for more leisure more appealing.

Finally, we develop a dynamic choice model that depicts the trade-off between income and leisure that women face in retirement decisions, which can be used in a next step to simulate different retirement policies and compare their outcomes.

Future research on the maternity benefit ought to shed light on the different effects it produced between women who were and were not in a couple, and how much agents value leisure relative to money.

Connect with the authors

About the BSE Master’s Program in Economics

Legislative Quota, Women Empowerment and Development: Evidence from Tanzania

Master project by Gregory Raiffa, Ericka Sánchez, Jan Stübner, Feodora Teti, and Andreas Wohlhüter. Barcelona GSE Master’s in International Trade, Finance, and Development

Editor’s note: This post is part of a series showcasing Barcelona GSE master projects by students in the Class of 2015. The project is a required component of every master program.


Authors: 
Gregory Raiffa, Ericka Sánchez, Jan Stübner, Feodora Teti, and Andreas Wohlhüter

Master’s Program:
International Trade, Finance and Development

Paper Abstract:

This paper analyzes whether the legislative women’s quota implemented in Tanzania has helped to reduce the existing gender gap in that country. We focus on a set of development indicators indicated by the literature and an analysis of female political activity. We exploit the variation in the number of female representatives across the 131 districts of Tanzania, employing a Difference and Differences approach including fixed effects and controlling for a number of socioeconomic variables.

Our analysis indicates that the legislative women’s quota in Tanzania has led to significant reductions in the gender gap and improvements for women. The quota has effectively increased political participation in accordance with its goals, and the level of female representation continues to rise. We find evidence that the quota has reduced the gender gap in education for certain age groups, and we find indications of small improvements to female empowerment. In accordance with previous findings in other countries, we find that the increased female representation has led to substantial investments in water infrastructure that has greatly increased the number of people with access to clean water. While we do not find significant health impacts, this may be due to limitations in our dataset.

Read the paper or view presentation slides: