The long-term implications of destruction during the Second World War on private wealth in Germany

Christoph Halbmeier () and Carsten Schröder
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Christoph Halbmeier: Helmut Schmidt University

Journal of Economic Growth, 2025, vol. 30, issue 1, No 4, 235 pages

Abstract: Abstract By the end of the Second World War, an estimated 20% of the West German housing stock had been destroyed. Building on a theoretical life-cycle model, this paper examines the persistent consequences of the war for individual wealth across generations. As our empirical basis, we link a unique historical dataset on the levels of wartime destruction in 1739 West German cities with micro data on individual wealth at the beginning of the twenty-first century from the German Socio-Economic Panel. Among individuals born in cities or villages that were badly damaged during the Second World War, wealth is still about 10% lower today. Similarly, the destruction of parental birthplace has significant negative implications for the wealth of their descendants. These negative implications are robust after controlling for a rich set of pre-war regional and city-level control variables. In complementary empirical exercises, we study potential channels such as inheritances, health, and education, through which the wartime destruction could have affected wealth accumulation across generations.

Keywords: Wealth; Second World War; Destruction; Socio-Economic Panel (SOEP); Life-cycle models (search for similar items in EconPapers)
JEL-codes: D31 N34 N44 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s10887-024-09242-2

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