The COVID-19 pandemic had a silver lining for some: The sudden interruption of daily routines was an opportunity to reconsider life choices. This was perhaps especially true for working mothers who lost their childcare providers, which may have increased the value of work flexibility. For women who had already been pondering selfemployment, the pandemic may have been a powerful nudge to join the ranks of entrepreneurs.

Indeed, according to an AARP survey, two-thirds of American women age 40 and older who started a small business between January 2020 and June 2022 named the pandemic as a motivating factor — and 98% considered their business launch the right choice up to two years later.

Such data prompted Tessa Conroy to ask a natural follow-up question: Did more women start businesses in counties with mandatory childcare closure policies than those without them? The answer was a clear “yes.”

“Our study showed that the number of new women-owned businesses in 2021 was 28% higher in counties with mandatory closures,” says Conroy, an associate professor and extension specialist in the Department of Agricultural and Applied Economics. “Although we were unable to identify specific reasons, these closures were likely perceived as an acute life change at home that also caused changes in work preferences.”

For Conroy and coauthor Anil Rupasingha, a senior research economist with the U.S. Department of Agriculture, the pandemic created a so-called natural experiment, with some areas closing childcare facilities in March and April 2020 and others remaining open. The researchers compared counties in 30 states with closures to “control” counties in 20 states without them, assuming that all 3,108 analyzed counties followed their state’s policy.

Most closure durations ranged from 30 to 40 days, with extreme values of eight for Alabama and 98 for New York. Closure details, such as exceptions for essential workers, and limitation details, such as maximum group sizes of supervised children, varied greatly. The duration of limitations exceeded more than six months in 15 states.

Before the pandemic, a typical county saw 20 to 30 new female-owned businesses per year, according to a comprehensive dataset called the National Establishment Time Series. That number range was substantially higher in the approximately 1,100 urban counties (50–90) than it was in the roughly 2,000 rural counties (3–5). Business growth declined rapidly in 2020 followed by a rebound in 2021. The greater increase of new women-owned businesses in counties with mandatory childcare closures was more pronounced in urban (36%) than rural counties (25%).

“This difference makes sense since the margin of adjustment was smaller in rural counties, where women were already used to the scarcity of childcare before the pandemic,” Conroy says. “Rural areas also offer fewer market opportunities, an important factor in the decision-making process of potential entrepreneurs.”

The greater business growth in counties with closures mostly occurred in the service industry, not in the production or trade sectors. This was evidence against the common belief that women gravitate toward the online retail space for handmade goods; instead, Conroy notes, post-pandemic women-owned businesses appeared to be multifaceted.

In the absence of survey data, the researchers could not distinguish between opportunity entrepreneurship and necessity entrepreneurship. Opportunity entrepreneurship is driven by innovation or a lucrative market opening; necessity entrepreneurship stems from losing a job or working spouse, difficulty finding a salaried job, or underemployment.

Most entrepreneurial success metrics focus on business survival and economic productivity, such as growth in the founder’s income and number of employees. However, a profit-maximizing path may not be a priority for all founders, and researchers have documented a distribution of success for both types of entrepreneurs.

“We don’t know a founder’s trajectory at the onset, and starting from necessity doesn’t mean a business is doomed to fail,” Conroy says. “I think success metrics should include the household-level impact of strategies to manage multiple demands and the benefits of flexible work schedules for parents of young children.”

The results have a clear policy implication: Offering childcare or flexible work schedules and locations is critical for retaining employees when employers experience labor shortages. Childcare options can also support entrepreneurship — especially when female founders wish to grow their business.

A less obvious but equally important take-home message is this: The reasons for performance differences between male and female founders are complex. Previously reported reasons include men being more likely to start businesses in capital-intensive sectors, such as manufacturing, which often require more employees and produce higher revenue than those in women-dominated service sectors. Differences in risk preferences and educational background, such as differing fields of study, have also been noted.

The new study adds to the evidence for gender differences in founders’ intrinsic motivation for launching a business. Yet, regardless of its inspiration, entrepreneurship often produces positive outcomes by multiple metrics, Conroy says.

Last but not least, the study confirms the vital role of childcare for the female labor market and society at large. It supports early childhood development and the ability of parents to provide for their families, in addition to helping employers find the workers they need.

“High-quality childcare is an investment in improved outcomes later in life, such as higher test scores and graduation rates and a lower propensity for crime,” Conroy says. “For economists, these ‘positive externalities’ are a fundamental argument for government support of a public good — in this case, making high-quality childcare both available and affordable.”

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⊕ Federally Funded Research

This study, published in June 2025 in The Annals of Regional Science, was supported by USDA-ERS Cooperative Agreement 58-6000-2-0068.

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This article was posted in Economic and Community Development, Natural Selections, Spring 2026 and tagged agricultural and applied economics, COVID-19, entrepreneurship, Extension, Tessa Conroy.