The relationship between unemployment rates and self-employment is a long-standing one among both academics and policy makers. GEM data show a negative correlation between female entrepreneurial activity and both current and long-term levels of female unemployment. The results are particularly strong and statistically significant for low-income countries. Higher levels of unemployment for both men and women are most likely associated with a reduction in the demand for goods and services. This decline, in turn, reduces the opportunities and expected profits for potential new firms thereby discouraging the rate of new business formation.

Regardless of the unemployment rate, the ratio of women to men participating in the labor force is a measure of gender equality with respect to dependent labor. This measure ranges from about 1.0 in countries where the same proportion of women and men work, such as the Scandinavian countries, to about 0.5 in many developing countries such as Brazil and Mexico. In low-income countries, the correlations between the ratio of women to men in the labor force and all measures of entrepreneurial activity are negative. In other words, the entrepreneurial activity of women declines when they have more access to paid employment. In high-income countries, instead, for both men and women, the female to male participation rate in the traditional labor force is positively related to women entrepreneurial activity. This is an encouraging sign as it suggests that, in those countries, women are beginning to consider starting their own business as an attractive and rewarding possibility even when other labor options are available.