What 19th-century female entrepreneurs teach us about today’s economy

On “Marketplace,” we talk a lot about disaggregated economic data — that’s information about the economy broken down into categories such as race, gender, age and other variables. 

But much of that data is relatively new. For example, the Bureau of Labor Statistics didn’t make it possible to disaggregate employment data by both race and gender until 1972. So, how do economists find out what the economy looked like before disaggregated data? 

Marketplace’s Kristen Schwab spoke with Ruveyda Nur Gozen, a research economist at the London School of Economics who has studied female entrepreneurs of the 19th century, about how she and her research partners backed into a dataset on women-owned manufacturing businesses and what it can teach us about the economy today. The following is an edited transcript of their conversation.

Kristin Schwab: So, I guess I’m wondering, if there’s so little data about how women existed in the economy in the 19th century, how do you even decide where to dig in?

Ruveyda Nur Gozen: I mean, that’s an important question. Especially if you look at the literature, we observe [that] there are important studies studying women laborers or women in the labor market, but if you want to study women business owners, it’s actually really hard. And one of the data sets, you know, an important part of this paper is that we used a census of manufacturers, and in this data set, there’s a column where people recorded the name of the establishment owner. You need to infer gender based on the name, and that’s how we actually started to create this data set [of] women business owners based on the name. And we also linked this Census of Manufacturers to the Census of Population to understand, you know, who these women were.

Schwab: Yeah. Well, let’s go back and talk about the data set you built off of business owners’ names. Because you’re kind of jumping to some conclusions in there right? I imagine there’s some challenges in just having that little information. 

Gozen: Right. I mean, so, for example, one of the things is to look at the name and kind of guess the gender. For example, if it’s Elizabeth, then you say, you know, probably that’s a woman … if it’s John, you say that’s a male. [But] sometimes people write their initials. So in those cases, we had to make an assumption. And we said, “Let’s not assume that’s a woman, because we do not want to inflate the results.” And at the same time, there might be like unisex names or there might be multiple owners. That’s actually quite a small portion of the whole we found by using these methodologies. We found like 3,600 establishments owned by women, which is actually corresponding to only 1% of all the data that we have. So we were talking about it like a very small percentage, but it gives us a very distinctive picture about [those business owners] and about how they differ from their male counterparts.

Schwab: Yeah, well, tell me more about what you learned about studying this small flock of female entrepreneurs and what they maybe had in common.

Gozen: Right. I mean, I think the results are — to me, they’re very interesting. So, first of all, for example, we found that women actually started their businesses with significantly lower capital investments. And they were also very much concentrated in the East and in California. And in terms of industry too, they were very much concentrated, in like clothing, millinery, shoemaking, those areas as well. And even more interestingly, I think, we found that women entrepreneurs or [manufacturing] business owners hired more women compared to their male counterparts. And at the same time, they also paid them significantly higher wages. So that could suggest that increased female entrepreneurship or business ownership can expand opportunities for other women in the labor market. 

Schwab: Yeah well, let’s talk more about the purpose of this work and how we might apply some of these lessons to today’s economy.

Gozen: Right. So, we’re talking about 50% of the population, right, in all countries. And if you look at the data, we observe that women still participate less in entrepreneurial activities or innovative activities compared to men. This is an important issue because that means that we might be losing so many talents, or there are so many hidden or lost talents that we still need to uncover. So in that sense, for example, there are studies showing that women being role models, like in entrepreneurship or in innovative activities, can lead to more women [participating] in those areas — like STEM fields, [for] example. And at the same time, you know, creating these opportunities for other women can also have implication[s] in the long run. Disadvantaged groups, minorities, women, you know, they may face frictions, and it’s important to address these issues with policy tools.

Schwab: Do you have a favorite female-owned business or inventor that you’ve studied?

Gozen: Actually, there are several, because I also, you know, [study] women inventors. For example, in one of my papers, I talk about Josephine Cochrane, who invented the dishwasher machine. She invented that, patented it, and it became a very successful business. And if you look at, for example, the 19th-century innovations by women, it is very much concentrated in household appliances. So you would see a lot of applications like dishwasher machines, ovens, or refrigerators and those types of machinery. I think that was very fascinating.