Public R&D and the Automation of Manufacturing: Evidence from the Space Race

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.