Constructing and reconstructing gender: Reference group effects and women’s demand for entrepreneurial capital

Women’s acquisition of entrepreneurial capital may be restricted by demand side identity constraints as women who pursue non-traditional entrepreneurial livelihoods may stand at odds with activity-regulating social norms. By explicitly incorporating social norms into a model of women’s decision-making, this paper provides an analytical framework that helps understand the social factors that limit women’s demand for capital. The model shows that because of these social effects, a credit program that relaxes supply constraints may reconstruct gender norms and have a social multiplier effect, shifting an entire group or community to a higher-income equilibrium. Using a social effects econometric framework, the paper then confirms the existence of reference group effects on women’s demand for entrepreneurial capital in rural Paraguay. Identification of these as endogenous social effects relies on the separate measurement of each woman’s social reference group, allowing the use of village-level fixed effects to sweep away confounding contextual influences. Results are robust to the use of a restricted reference group comprised solely of ‘inherited’ family members, and analysis of demand by male partners reveals that the social effect is gendered The empirical work in this paper was supported by the John D. and Catherine T. MacArthur Foundation and by all the institutions involved in the Credit Project for Northeast Paraguay: the International Fund for Agricultural Development (IFAD), the Paraguayan Center for Sociological Studies (CPES), the Fund for Peasant Development (FDC), the Department of Agriculture (MAG), and the Department of Charity (DIBEN). The authors would like to acknowledge and thank helpful suggestions from anonymous referees as well as participants at the NEUDC and PACDEC conferences, the CSDE seminar at the University of Washington and the Development Seminar at the University of Wisconsin. Any errors are our responsibility. ∗ Corresponding author at: 229 Parrington Hall, University of Washington – Box 353055, Seattle, WA 98195, United States. Tel.: +1 206 616 1297; fax: +1 206 543 1096. E-mail address: [email protected] (D. Fletschner). 1053-5357/$ – see front matter © 2007 Elsevier Inc. All rights reserved. doi:10.1016/j.socec.2006.12.054 Author's personal copy D. Fletschner, M.R. Carter / The Journal of Socio-Economics 37 (2008) 672–693 673 and hence likely to reflect social norm effects rather than endogenous social learning or exogenous social effects. © 2007 Elsevier Inc. All rights reserved. JEL classification: C25; D13; O12; Z13