Female Recruitment in Startups: Evidence from a Regression-Discontinuity-in-Time Approach

Research Seminar

Management & Human Resources

Speaker: Olenka Kacperczyk  

London Business School

Bernard Ramanantsoa room

Authors listed alphabetically: Francesco Castellaneta, Raffaele Conti, Olenka Kacperczyk

Abstract

Women are underrepresented in startups, but efforts to understand the mechanisms behind this disparity remain limited. Conventional explanations, rooted in the supply side, are unlikely to fully explain why the gender gap arises. Turning our attention to the demand side, we propose that challenges of women’s recruitment in startups reflect, in part, an employer's strategic choice to defer investment under uncertainty. We argue that, when reversing a hiring decision becomes less costly – due to lower termination costs – startups become more likely to recruit uncertain hires (i.e., women) to explore their fit on the job. Using evidence from the Portuguese registry data between 2009 and 2013 and the Regression in Time Discontinuity Design (RDiT), we find support for our claims. Following the enactment of a reform that reduces the cost of dismissing new hires, startups become more likely to hire women, but the termination rate also increases. Overall, our findings document a new mechanism – i.e., costly reversibility of recruitment – driving the gender gap in startup workforce.