Adoption of Technological Change in the Public Sector: Evidence From US States

Abstract

Our paper explores the broad influences that stimulate technological change in governmental service delivery. Using panel data by state, we examine whether residents are able to apply for Unemployment Insurance (UI) benefits via technology services such as the internet or automated telephone, or are required to apply in person. The reduced form model tests for the relative influence of residential demand, political pressure, and bureaucratic influence. We find that it is the dispersion of the urban population across a state that provides the impetus for government adoption of new technology, in stark contrast to the importance of urban concentration found for the private sector. A unique additional influence we test is the ability of the entrenched bureaucracy to impede technology options. We find that governors of either political party in their term-limited term—when compromise with bureaucrats is less important—save 4% in administrative costs. We find that technology adoption can be delayed but not prevented by bureaucratic interests.