This paper provides new empirical evidence on the relative productivity disadvantage of female-owned firms compared to male-owned firms in a developing country setting. We rely on a large panel of manufacturing firms based on an annual census run by the Central Statistical Agency of Ethiopia over 2003-2009. Our preferred estimation shows a 12% difference in levels of total factor productivity between female- and male-owned firms. Drawing on novel quantile approaches to formally compare productivity distributions, we also dig deeper into some of the potential mechanisms underlying this gender-based firm productivity gap. Our findings suggest that various forces are at work. Most female-owned firms seem to concentrate in certain less productive (sub)sectors and only very few succeed in standing out. Moreover, lower productivity of female-owned firms is shown to relate to a combination of observed firm characteristics (smaller firm size and lower capital intensity) and unobserved structural factors (lower returns to capital) that varies according to a firm’s position in the overall productivity distribution.
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