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War-Time Destruction and the Persistence of Economic Activity

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  • Glocker, Daniela
  • Sturm, Daniel

Abstract

A key prediction of a large class of theoretical models is that the location of economic activity is not necessarily determined by fundamentals. To test the empirical relevance of these ideas requires a natural experiment in which a large but ultimately temporary shock dislocates economic activity. Following Davis and Weinstein (2002) a number of papers have used war-time destruction as such a temporary shock. In this paper we revisit this debate and use the cities that were part of pre-war Germany and become part of Poland after the Second World War as a natural experiment. We show that also in this case cities recover surprisingly fast from the war-time shock despite heavy destruction and the expulsion of the entire population. Our results suggest that either the location and size of cities is indeed determined by fundamentals or that even heavily destroyed cities are rebuilt because the ruins contain valuable surviving structures. We provide suggestive qualitative evidence that the second interpretation is more likely correct.

Suggested Citation

  • Glocker, Daniela & Sturm, Daniel, 2014. "War-Time Destruction and the Persistence of Economic Activity," VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100282, Verein für Socialpolitik / German Economic Association.
  • Handle: RePEc:zbw:vfsc14:100282
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    File URL: https://www.econstor.eu/bitstream/10419/100282/1/VfS_2014_pid_532.pdf
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    Cited by:

    1. Rosenthal, Stuart S. & Ross, Stephen L., 2015. "Change and Persistence in the Economic Status of Neighborhoods and Cities," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 1047-1120, Elsevier.
    2. Michael Fritsch & Alina Sorgner & Michael Wyrwich & Evguenii Zazdravnykh, 2016. "Historical shocks and persistence of economic activity: evidence from a unique natural experiment," HSE Working papers WP BRP 143/EC/2016, National Research University Higher School of Economics.
    3. Jedwab, Remi & Johnson, Noel D. & Koyama, Mark, 2024. "Pandemics and cities: Evidence from the Black Death and the long-run," Journal of Urban Economics, Elsevier, vol. 139(C).

    More about this item

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • N74 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - Europe: 1913-

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