Robots and the Public Finance of Disability Insurance

Duha T. Altindag, Reem El Cheikh Taha, John M. Nunley and R. Alan Seals

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Abstract: Automation affects public budgets through wages and the tax base, and also through inflows into social insurance. We estimate the effect of industrial robot exposure on Social Security Disability Insurance (SSDI) applications using confidential commuting-zone data and a shift-share design that instruments U.S. exposure with earlier European robot diffusion. One additional robot per 1,000 workers lowers applications by about 8 per 100,000 working-age residents, with the largest declines among workers aged 55 to 64. Employment-to-population ratios do not fall in exposed commuting zones, which weighs against broad local displacement as the sole explanation. A year's flow of averted applications corresponds to about \$3.4 billion in expected SSDI and Medicare obligations, or about \$17,000 per robot-year, in present value rather than realized cash. Displacement adds to social-insurance costs, whereas robot exposure here reduces them, an offset that assessments built only on displacement leave unpriced.

Date: 2026-07
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