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Public R&D and the Automation of Manufacturing: Evidence from the Space Race -- by Apoorva Babbar, Shawn Kantor, Alexander Whalley, Jingyuan Zeng

This paper examines how public research and development shaped the direction of technological change during the Cold War–era Space Race and its consequences for US manufacturing. While prior research has documented the effects of public R&D on innovation and economic growth, less is known about whether mission-oriented public investment directed innovation toward automation and how this affected labor markets. We exploit variation in exposure to NASA's Space Race investments across industries an

7 November 2026 · Source: NBER new working papers

This paper examines how public research and development shaped the direction of technological change during the Cold War–era Space Race and its consequences for US manufacturing. While prior research has documented the effects of public R&D on innovation and economic growth, less is known about whether mission-oriented public investment directed innovation toward automation and how this affected labor markets. We exploit variation in exposure to NASA's Space Race investments across industries and locations to estimate the effects of public R&D on innovation and manufacturing outcomes from 1947 to 1992. Combining newly developed measures of automation in full-text patent data with historical evidence on government involvement in patenting, we show that NASA-sponsored patents are systematically more automation-intensive than non-NASA patents within the same technological classes. Industries and locations more exposed to Space Race activity experienced persistent declines in labor share, consistent with the diffusion of labor-saving technologies developed for space applications. In contrast, we find little evidence of systematic changes in skill composition. These findings show that mission-oriented public R&D can shape the direction of technological change and have lasting distributional consequences. Acknowledgements and Disclosures We thank audiences at the Society of Labor Economists (SOLE) Denver, Alberta Centre for Labor Research, Canadian Economics Association, and the University of Calgary, as well as, Alberto Galasso for helpful discussions. Financial support from the Alberta Major Innovation Fund is gratefully acknowledged. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. We thank audiences at the Society of Labor Economists (SOLE) Denver, Alberta Centre for Labor Research, Canadian Economics Association, and the University of Calgary, as well as, Alberto Galasso for helpful discussions. Financial support from the Alberta Major Innovation Fund is gratefully acknowledged. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. Citation and Citation Data Copy Citation Apoorva Babbar, Shawn Kantor, Alexander Whalley, and Jingyuan Zeng, "Public R&D and the Automation of Manufacturing: Evidence from the Space Race," NBER Working Paper 35966 (2026), https://doi.org/10.3386/w35966. Copy to Clipboard Download Citation MARC RIS BibTeΧ Download Citation Data In addition to working papers, the NBER disseminates affiliates’ latest findings through a range of free periodicals—the NBER Reporter, the NBER Digest, the Bulletin on Health, the Bulletin on the Economics of Alzheimer's, and the Bulletin on Entrepreneurship—as well as research spotlights, lectures, and panel videos. Presenters: Melissa Dell & Ashesh Rambachan Presenter: Paul Goldsmith-Pinkham

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