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Recent research reveals a significant gender disparity in the field of innovation, predominantly dominated by well-off men, which leads to slower development of products for women and ultimately hampers economic growth. The study, "Social Push and the Direction of Innovation," conducted by the VATT Institute for Economic Research and its lead researcher Elias Einiö, along with colleagues Josh Feng from the University of Utah and Xavier Jaravel from the London School of Economics, sheds light on this critical issue using data from Finland and the United States.

Einiö describes a phenomenon of "homophily" among innovators - the tendency to create products for people who are similar to themselves in terms of gender, socioeconomic status, and age. This bias in innovation favors the peer group of the innovators, often neglecting the needs of other segments, particularly women. As a result, products targeted at women tend to be underdeveloped, more expensive, or non-existent, exacerbating gender-based economic inequality.

The study estimates that this disparity in innovation leads to a 18.7% cost of living difference between women and men, comparable to the known gender pay gap. "The focus of innovation on male-dominated consumer markets effectively doubles the economic inequality between genders," Einiö points out.

The underrepresentation of women in innovation not only limits the diversity of products and services available but also slows down productivity growth. Einiö suggests that reducing barriers for women in innovation should be a key policy goal. For instance, smartphone applications developed with at least one woman on the team have 20% more female users compared to those developed solely by men.

The study also indicates that innovators from affluent backgrounds are more likely to serve wealthier consumers, leaving a significant portion of the market underserved. This misalignment of talent in innovation activities, according to Einiö, restrains overall economic growth.

The researchers expand upon Romer's growth theory in economics by incorporating different consumer and innovator groups into their theoretical model. They conclude that increasing women's participation in innovation yields dual benefits: it boosts economic growth and simultaneously reduces economic inequality.

This research underscores the need for more inclusive and diversified innovation practices, emphasizing the importance of tapping into the full potential of talented individuals, regardless of gender, for a more equitable and prosperous society.

HT

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