A Glass Floor in Microentrepreneurship? Gender, Care Work, and a Widening Profit Gap
Despite women microentrepreneurs in Chile matching or exceeding men in observable capabilities like education and digital skills, their businesses earn significantly lower profits with a widening gender gap driven by unequal returns rather than compositional differences, a disparity concentrated among the lowest-profit firms and linked to women's disproportionate burden of unpaid care work.
Original paper licensed under CC BY 4.0 (https://creativecommons.org/licenses/by/4.0/). This is an AI-generated explanation of the paper below. It is not written or endorsed by the authors. For technical accuracy, refer to the original paper. Read full disclaimer
In the world of small business, success is often measured by the resources a person brings to the table: how much education they have, whether they can use a computer to sell their goods, and if they have received training on how to run a company. For decades, researchers have assumed that if women and men possess similar skills and tools, their businesses should earn similar profits. This assumption underpins much of the effort to support female entrepreneurs, which often focuses on closing gaps in digital access or business education. However, a growing body of evidence suggests that having the right tools does not guarantee the same results for everyone. In many parts of the world, women run businesses that are just as educated and connected as men's, yet they earn significantly less. Understanding why this happens is crucial because it shifts the focus from fixing individual skills to understanding the invisible barriers that prevent those skills from turning into money.
A new study from Chile investigates this puzzle by looking at thousands of micro-entrepreneurs over eight years. The researchers examined data from 2017 to 2025, a period that included the global pandemic and the subsequent economic recovery. They found a startling trend: while women in Chile have caught up to, and in some cases surpassed, men in education, internet use, and business training, the gap in how much money their businesses make has not closed. In fact, it has widened. Between 2019 and 2025, the difference in profits between male and female-owned businesses grew by roughly 50 percent. This means that even as women gained more of the measurable advantages associated with business success, their financial returns fell further behind.
The researchers dug deep to understand why this gap is growing. They looked at whether women were entering different industries or if they were simply less likely to hire employees, but the data showed that the types of businesses men and women run have remained largely the same over time. They also tested a common theory: that the heavy burden of unpaid care work, such as looking after children or elderly relatives, forces women to run smaller, less profitable businesses. The data confirmed that Chilean women do spend significantly more time on unpaid care than men, reporting nearly twice as many hours per week. This extra time is strongly linked to why women start businesses in the first place; they are more likely to be pushed into entrepreneurship out of necessity rather than opportunity. However, when the researchers tried to use this care time to explain the profit gap, it fell short. The amount of time women spent on care explained very little of why their businesses earned less money than men's.
Instead, the study points to a different phenomenon, which the authors call a "glass floor." This is the opposite of the more famous "glass ceiling," which suggests women hit a limit at the top of their careers. A glass floor suggests that the most severe penalties are felt at the bottom. The data showed that the profit gap is not spread evenly across all businesses; it is concentrated among the lowest-earning entrepreneurs. Women running the smallest, most vulnerable businesses are the ones suffering the largest financial disadvantage compared to their male counterparts. Even after accounting for education, sector, and digital skills, the vast majority of the profit gap remains unexplained. The researchers found that the widening gap is driven primarily by changes in how the market rewards these businesses, rather than by a change in the types of people entering the field. In other words, two entrepreneurs with identical skills and resources are not receiving the same financial return if one is a woman and the other is a man.
This finding challenges the idea that simply giving women more training or better internet access will solve the problem. The study suggests that the issue lies not in the capabilities of the women themselves, but in the conditions under which they operate. The barriers preventing women from converting their skills into profits are likely hidden factors such as access to capital, networks, or markets, or perhaps subtle forms of discrimination that standard surveys cannot directly measure. The research concludes that while policies helping women enter business are important, they are not enough. To truly close the gap, policymakers must look beyond individual skills and address the structural conditions that determine how business outcomes are realized, particularly for those running the smallest and most vulnerable enterprises.
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