The Long-Term Effects of Military Occupations: Evidence from Post-World War II Austria

Christoph Eder, Martin Halla and Philipp Hilmbauer-Hofmarcher ()
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Philipp Hilmbauer-Hofmarcher: Department of Economics, Central European University

Department of Economics Working Papers from Vienna University of Economics and Business, Department of Economics

Abstract: How does military occupation affect long-term economic development? We use the post-World War II occupation of Austria as a laboratory setting. Austria was divided into different occupation zones for ten years. The Soviet occupation was exploitative, while the Western Allied occupation was more supportive. After ten years of different occupation regimes, the regions returned to a single nation-state. We estimate the impact of different occupation regimes on long-term economic development. Methodologically, we combine a spatial regression discontinuity design with a difference-in-differences approach. We find that areas in the former Soviet zone are still less economically developed today. These areas are less populated, host fewer and lower paying jobs, and their residents are more likely to commute outside the former Soviet zone. The most plausible mechanism for these long-lasting effects are agglomeration effects triggered by a large migration shock from East to West as the population fled the advancing Soviet army.

Keywords: Military occupation; migration; economic development; World War II; Austria; agglomeration effects (search for similar items in EconPapers)
JEL-codes: J61 N44 N94 R11 R12 R23 (search for similar items in EconPapers)
Date: 2024-07
New Economics Papers: this item is included in nep-cis, nep-gro, nep-his, nep-mig and nep-ure
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Working Paper: The Long-Term Effects of Military Occupations: Evidence from Post-World War II Austria (2024)
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