War and Structural Change: Evidence from post-WWI Germany
Lukas Wellner (Monash University); Tobias Korn (Leibniz University of Hannover); Matthias Quinckhardt (Heidelberg University)
Abstract
We investigate the role of World War I casualties on German economic and political development in the interwar period. We geocoded the birthplaces of 8.5 million wounded and killed German soldiers, and linked these casualties to newly digitized county-level census data from before and after the war. Our main results are based on continuous difference-in-differences estimations and illustrate that counties that suffered a higher human loss during the war specialized more in industrial production and moved employment out of self-sufficient farming. Counter-intuitively, we find that wages in the low-skilled sector decreased in more affected counties, which we interpret as a negative skill selection effect.