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Industrial automation and local public goods

Author

Listed:
  • Spreen, Thomas Luke
  • Wang, Ziyuan
  • Yang, Lang (Kate)

Abstract

Recent research shows industrial automation raises labor productivity but also depresses employment and wages in exposed industries and regions. This paper examines the impact of automation on U.S. state and local governments. We find that state and local governments with greater exposure to automation experience significant declines in per capita revenues and expenditures. The spending reduction is concentrated in K-12 education and is driven primarily by a decrease in state support. Automation exposure is also associated with a decline in student test scores. These findings suggest that industrial automation impairs state and local financing of public education and student outcomes.

Suggested Citation

  • Spreen, Thomas Luke & Wang, Ziyuan & Yang, Lang (Kate), 2025. "Industrial automation and local public goods," Journal of Public Economics, Elsevier, vol. 247(C).
    • Handle: RePEc:eee:pubeco:v:247:y:2025:i:c:s0047272725000921
    DOI: 10.1016/j.jpubeco.2025.105394
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    More about this item

    Keywords

    Robots; Automation; Public finance; Public goods;
    All these keywords.

    JEL classification:

    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies

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