Can Immigration Cause Local Industrialization? Evidence from Germany’s Post-War Population Transfer

Michael Peters
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Michael Peters: Yale University

No 352, 2017 Meeting Papers from Society for Economic Dynamics

Abstract: Can increases in the size of the local population spur economic development? This paper uses a particular historical episode to study this question empirically. After the Second World War, between 1945 and 1948, about 12m Ethnic Germans were expelled from regions in Middle and Eastern Europe and transferred to Western Germany. At the time, this inflow amounted to almost 20% of the Western German population. Importantly, there are vast cross-sectional differences in the extent to which refugees were allocated to individual counties and various features of the allocation mechanism make it possible to construct exogenous variation in these local supply shocks. I study the effect of such shocks on Germany's regional economic development between 1950 and 1970. I find that refugee-inflows are positively correlated with local income per capita and manufacturing employment. These patterns are consistent with theories of agglomeration and endogenous technological change but harder to reconcile in a neoclassical framework.

Date: 2017
New Economics Papers: this item is included in nep-his, nep-mig and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed017:352

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