The paper then asks whether female-owned firms are less productive than male-owned firms. The productivity analysis shows that this is true for micro and small firms. However, there is no difference in productivity between medium-sized and large female- and male-owned firms.

The paper considers a number of different obstacles that could be the reason why female-owned firms are smaller than male-owned firms. Most of these obstacles do, however, not appear to differ across female- and male-owned firms. First, I do not find any consistent evidence that female-owned firms have less access to external finance than male-owned firms. Second, female firm owners are no more likely to perceive a host of institutional and market related factors to be obstacles to firm operation and growth than male-owned firms. The only significant difference in perceived obstacles is that female firm owners are up to 50 percent more likely than male firms owners to report that having to care for children and household obligations poses an obstacle to firm operation and growth.

Additional analysis using matched household-firm data for Mexican micro firms also suggests that child care obligations could be restricting the growth of female-owned firms. The results of this analysis show that the differences in size and profits between female- and male- owned firms are larger in households where children under the age of 12 are present. The presence of children accounts for 30 to 40 percent of the differences in size and profits between female- and maleowned firms. Data from Mexico and Bolivia also indicate that women are two to three times more likely than men to operate a business from inside their home. This suggests that household obligations could be restricting the location, size and industry choices of female entrepreneurs<sup>3</sup> .

Finally, the paper examines differences in risk aversion as another factor that could explain why female-owned firms tend to be smaller than male owned firms. Data from Mexico, however, do not show any differences in the level of risk aversion of female and male entrepreneurs.

This paper is related to Sabarwal and Terrell (2009) who study the performance of female-owned firms in Latin America. They also find that female-owned firms are smaller than male-owned firms in many dimensions. However, their paper differs from this paper in the sense that they only use data on formal firms with over 5 employees. Moreover, the data they use does not clearly distinguish between female-owned firms and family-owned firms, since the data only indicates whether one of the principal owners if female. The results are thus not directly comparable to the results of this paper. In addition, the data used in Sabarwal and Terrell does not allow them to examine child care and household obligations as an obstacle to firm

> 3 Note that this evidence does not necessarily imply that female firms would grow if women’s child care and household obligations were reduced. The correlations observed in this paper are equilibrium outcomes, which could reflect an efficient division of labor in the household instead of reflecting an obstacle to female-owned firm growth. Investigating whether female-owned firms would grow if women’s child care and household obligations were reduced requires examining the effect of an exogenous change in child care and/or household obligations on female firm growth, such as the introduction of a child care program. The findings in this paper suggest that this is an important area for future research.

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