Coronavirus – Number of German Companies Founded by Women Shrank Fastest in Rural Areas

Since the beginning of the coronavirus pandemic, the proportion of companies founded by women has fallen most steeply in rural areas. Women were already founding less than 20 percent of all new companies prior to the pandemic, and Germany’s commercial register shows that this figure dropped to 16 percent in 2021. This is the finding of a new ifo study.

The decline in the proportion of companies founded by women is particularly strong in rural districts in western Germany. Outside major cities in that region, the proportion is now 13 percent – a significant drop from the peak of 17 percent recorded in 2012. In major cities and in rural districts in eastern Germany – regions with better childcare – women founded more new companies (2021: 19 percent and 14 percent, respectively).

Over the past few years, the proportion of women founders has declined in almost all sectors. This is particularly noticeable in high-tech, where innovation potential is at its highest.

“When schools closed during the pandemic, women bore the brunt of additional childcare responsibilities, making it even harder for them to achieve a successful work-life balance. It’s possible that this further dampened the drive to start a new company,” explains the ifo Institute’s Elena Herold, one of the study’s authors.

Conducted in collaboration with infas 360, the study examined the entries of new companies added to Germany’s commercial register from 2005 to 2021. The majority of the data concerned limited liability companies (GmbHs) and entrepreneurial companies (Unternehmergesellschaften), and thus businesses with above-average innovation potential.