## INNOVATION’S UNSEEN FRONTIER

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**Canonical URL:** [INNOVATION’S UNSEEN FRONTIER](https://www.imf.org/-/media/files/publications/fandd/article/2025/03/jaravel.pdf)

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### Summary
- Innovation requires opportunity as well as necessity; parental background and sociological factors shape who becomes an innovator.
- Talented children from disadvantaged backgrounds are underrepresented among inventors, producing “Lost Einsteins” and “Lost Marie Curies.”
- Democratizing access to careers in innovation can mobilize untapped talent, raise long-term growth, and narrow gender and intergenerational inequalities.

### Parental backgrounds and empirical findings
- Study using 1996–2012 data from the US Patent and Trademark Office showed a correlation between parental income and the likelihood of obtaining a patent.
- Among those whose parents’ earnings fell below the 80th percentile, there were fewer than four inventors for each thousand people.
- For individuals whose parents were in the top 20 percent of earners, there were as many as eight patent holders among each thousand people.
- Comparing children with similar math test scores in third grade:
  - Children with lower test scores generally had a smaller likelihood of becoming inventors regardless of parental earnings.
  - Among kids who scored at the 90th percentile or higher, those whose parents were in the top 20 percent of earners grew up to include more than twice as many patent holders as those from families with lower incomes.
- Evidence from Finland (Philippe Aghion et al., 2017) indicates that sociological factors, not only financial constraints, shape disparities in access to innovation careers, despite free universal education.

### Macroeconomic implications and quantitative projections
- Model developed with Elias Einio and Josh Feng (2023) findings:
  - Gender parity in access to careers in innovation could boost productivity growth by 70 percent.
  - For high-income countries such as the United States, this would translate into an annual increase in productivity growth of 2.0 to 3.4 percent.
  - Baseline represents 12 percent female inventors.
  - Bringing the highest-ability children into innovation careers would account for most of the economic gains.
- Family background effects:
  - Providing equal opportunities for all individuals in the top 1 percent of the skill distribution, regardless of family background, could increase GDP growth rates by 55 percent.
- Chart and cohort notes:
  - CHART 1 note: 1980–84 birth cohorts; (US patent inventors per thousand children).
  - CHART 2 note: (advanced economy labor productivity, annual growth, percent).

### Direction of innovation
- Diversifying the pool of inventors can influence the direction of innovation because innovators often solve problems they have faced.
- Historical and contemporary examples:
  - Josephine Cochrane invented the dish washing machine to protect fine china.
  - Christopher Gray developed the scholarship app Scholly drawing on personal experience.
  - Female entrepreneurs are driving growth in “femtech.”
- Empirical patterns:
  - Innovators from high-income families are more likely to develop products aimed at high-income consumers and to avoid industries catering to basic needs.
  - Similar patterns apply to gender and age, contributing to purchasing power disparities across consumer groups.

### Education, diffusion, and international considerations
- A more inclusive education system accelerates diffusion of innovation by enabling broader adoption of existing technologies.
- Example: Creation of new colleges in France during the 1990s expanded access to education and resulted in increased new business formation (Elio Nimier-David, 2023).
- Democratizing access in low-income countries:
  - Agarwal and others (2023) suggest lowering immigration barriers and expanding scholarships for top foreign students from developing economies to widen access to innovation careers.

### Policy prescriptions and targeted interventions
- General human capital policies are necessary but not sufficient; targeted initiatives are important to provide exposure to innovation careers.
- Evidence-based interventions:
  - Childhood proximity to inventors increases likelihood of becoming an inventor (Bell and others, 2019).
  - Randomized controlled trials highlight mentoring programs and role-model effects on career choices.
  - Breda and others (2023) find that brief exposure to female role models in scientific fields significantly influences high school girls’ choices of undergraduate majors, with a particularly strong effect on high-achieving 12th-grade girls; the gender gap in STEM enrollment narrows significantly after such intervention.
- Suggested policy tools:
  - Mentoring programs and role-model visibility in scientific fields.
  - Targeted scholarships and funding programs to bridge gender and socioeconomic gaps.
  - Efforts to bring highest-ability children from disadvantaged backgrounds into innovation careers.
  - Measures to broaden access internationally, such as reducing immigration barriers and expanding scholarships for top students from developing economies.

*Xavier Jaravel, “Innovation’s Unseen Frontier,” Finance & Development, MARCH 2025.*

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_Source: https://www.imf.org/-/media/files/publications/fandd/article/2025/03/jaravel.pdf_