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

Author

Listed:
  • Christoph Eder

    (Independent, formerly JKU Linz)

  • Martin Halla

    (Department of Economics, Vienna University of Economics and Business)

  • Philipp Hilmbauer-Hofmarcher

    (Department of Economics, Central European University)

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.

Suggested Citation

  • Christoph Eder & Martin Halla & Philipp Hilmbauer-Hofmarcher, 2024. "The Long-Term Effects of Military Occupations: Evidence from Post-World War II Austria," Department of Economics Working Papers wuwp366, Vienna University of Economics and Business, Department of Economics.
    • Handle: RePEc:wiw:wiwwuw:wuwp366
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    More about this item

    Keywords

    Military occupation; migration; economic development; World War II; Austria; agglomeration effects;
    All these keywords.

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • N44 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Europe: 1913-
    • N94 - Economic History - - Regional and Urban History - - - Europe: 1913-

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