Government support of female employee-dominated firms: Lessons from the Covid-19 pandemic

The global crisis of COVID-19 accentuates the existing vulnerabilities and represents a major challenge to sustainable development. This study addresses gender differences in the operation of global firms during the COVID-19 pandemic and is assessing the effectiveness of mitigation policies. Using survey data of 31,463 firms in 40 countries, we document that firms with more than 50% women of total workers (female-dominated firms) are more likely to be permanently closed than the others, and suffer more decrease in number of workers, operation hours, and sales. Female-dominated firms mainly rely on government grants as source of finance compared to other ways of financing, and they indeed are more likely to receive government support than other firms. Both firms’ performance and countries’ policy environment are driving the difference. Drawing on Institutional Theory, we explore the role of female-friendly policy environment on assisting vulnerable firms, and apply an IV approach to address the endogeneity issue. We find that supporting police measures could moderate difficulties faced by female-dominated firms. Our findings highlight the importance of the design of fiscal stimulus packages and social assistance programmes to cope with gender inequality in the Covid-19 pandemic and other possible disasters.