Economic Anxiety and Belief in the American Dream: How Will Redistributive Preferences Evolve as Automation Disrupts Labor Markets?

Abstract

If growth in automation increasingly challenges the American Dream, will preferences for redistributive policies increase? We inform survey experiment respondents that automation will increase inequality, and luck or decisions made by elites (rather than individual effort) will influence who loses out. We find that beliefs promoted by the American Dream are relatively immutable and preferences for redistributive policies increase only where baseline support is sufficiently high, relatively unpolarized along partisan lines, or where respondents are skeptical of elites. However, leveraging the labor market shock caused by the COVID-19 pandemic to create a state-of-the-art re-centered shift-share IV, we causally identify that shock exposure interacts with our informational treatments to increase perceived economic vulnerability, overriding resistance to redistribution arising from opposition to government intervention in the economy, and heightening preferences for several innovative redistributive policies.