IDEAS home Printed from https://ideas.repec.org/a/eee/ecolet/v178y2019icp66-69.html

The long-run effects of government spending on structural change: Evidence from Second World War defense contracts

Author

Listed:
  • Li, Zhimin
  • Koustas, Dmitri

Abstract

This paper studies the long-run effects of the largest government spending program in U.S. history – Second World War defense spending – on structural change in local economies. We link a dataset of war supply contracts with economic data at the county level spanning from 1930 to 2000. Using counties that received no defense spending as a comparison group and controlling for prewar characteristics, we find that wartime defense spending led to sustained reallocation of labor to manufacturing and other non-agricultural sectors in war production centers, contributing to the long-term population growth in those regions.

Suggested Citation

  • Li, Zhimin & Koustas, Dmitri, 2019. "The long-run effects of government spending on structural change: Evidence from Second World War defense contracts," Economics Letters, Elsevier, vol. 178(C), pages 66-69.
    • Handle: RePEc:eee:ecolet:v:178:y:2019:i:c:p:66-69
    DOI: 10.1016/j.econlet.2019.02.012
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0165176519300564
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.econlet.2019.02.012?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Price V. Fishback & Taylor Jaworski, 2016. "World War II and US Economic Performance," Studies in Economic History, in: Jari Eloranta & Eric Golson & Andrei Markevich & Nikolaus Wolf (ed.), Economic History of Warfare and State Formation, pages 221-241, Springer.
    2. Price Fishback & Joseph A. Cullen, 2013. "Second World War spending and local economic activity in US counties, 1939–58," Economic History Review, Economic History Society, vol. 66(4), pages 975-992, November.
    3. Enrico Moretti, 2014. "Local Economic Development, Agglomeration Economies, and the Big Push: 100 Years of Evidence from the Tennessee Valley Authority," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(1), pages 275-331.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lleras-Muney, Adriana & Morgan, Tommy & Price, Joseph & Wygal, William, 2025. "The effect of World War II spending and army service on the lifespan of the Black population," Explorations in Economic History, Elsevier, vol. 97(C).
    2. Jaworski, Taylor & Yang, Dongkyu, 2025. "Did war mobilization cause aggregate and regional growth?," Explorations in Economic History, Elsevier, vol. 97(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ethan Ilzetzki, 2024. "Learning by Necessity: Government Demand, Capacity Constraints, and Productivity Growth," American Economic Review, American Economic Association, vol. 114(8), pages 2436-2471, August.
    2. Fuchs-Schündeln, N. & Hassan, T.A., 2016. "Natural Experiments in Macroeconomics," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 923-1012, Elsevier.
    3. Jung, Yeonha, 2020. "The long reach of cotton in the US South: Tenant farming, mechanization, and low-skill manufacturing," Journal of Development Economics, Elsevier, vol. 143(C).
    4. Jaworski, Taylor & Yang, Dongkyu, 2025. "Did war mobilization cause aggregate and regional growth?," Explorations in Economic History, Elsevier, vol. 97(C).
    5. Kikuchi, Tatsuru, 2025. "Nonparametric Identification and Estimation of Spatial Treatment Effect Boundaries: Evidence from 42 Million Pollution Observations," MPRA Paper 126731, University Library of Munich, Germany.
    6. Stephan Heblich & Stephen J Redding & Daniel M Sturm, 2020. "The Making of the Modern Metropolis: Evidence from London," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 135(4), pages 2059-2133.
    7. Eduardo A. Haddad & Luis A. Galvis & In�cio F. Ara�jo-Junior & Vinicius A.Vale, 2018. "Impact Assessment of Scenarios of Interregional Transfers in Colombia," Documentos de Trabajo Sobre Economía Regional y Urbana 16767, Banco de la República, Economía Regional.
    8. Rafael Dix-Carneiro & Brian K. Kovak, 2015. "Trade Reform and Regional Dynamics: Evidence From 25 Years of Brazilian Matched Employer-Employee Data," NBER Working Papers 20908, National Bureau of Economic Research, Inc.
    9. Barone, Guglielmo & David, Francesco & de Blasio, Guido, 2016. "Boulevard of broken dreams. The end of EU funding (1997: Abruzzi, Italy)," Regional Science and Urban Economics, Elsevier, vol. 60(C), pages 31-38.
    10. Li, Jiaxin & Zhan, Shaoguo & Wang, Xuetian, 2025. "Can special economic zones in China enhance firm's global value chain position?," Structural Change and Economic Dynamics, Elsevier, vol. 74(C), pages 361-372.
    11. Hasan, Rana & Jiang, Yi & Rafols, Radine Michelle, 2021. "Place-based preferential tax policy and industrial development: Evidence from India’s program on industrially backward districts," Journal of Development Economics, Elsevier, vol. 150(C).
    12. Griffin, Míde & Lyons, Sean & Nolan, Anne, 2025. "Rural electrification and secondary school enrolments in Ireland," MPRA Paper 124216, University Library of Munich, Germany.
    13. repec:osf:socarx:nkydt_v1 is not listed on IDEAS
    14. Andrew Hanson & Shawn Rohlin, 2024. "Local employment multipliers for large publicly subsidized firms: Evidence from a synthetic control approach," Journal of Regional Science, Wiley Blackwell, vol. 64(2), pages 491-526, March.
    15. Ralph Ossa, 2015. "A Quantitative Analysis of Subsidy Competition in the U.S," 2015 Meeting Papers 1107, Society for Economic Dynamics.
    16. repec:osf:socarx:rpq5z_v1 is not listed on IDEAS
    17. David Card & Jesse Rothstein & Moises Yi, 2025. "Location, Location, Location," American Economic Journal: Applied Economics, American Economic Association, vol. 17(1), pages 297-336, January.
    18. Clay, Karen & Hernandez-Cortes, Danae & Jha, Akshaya & Lewis, Joshua & Miller, Noah & Severnini, Edson, 2025. "The Social Lifecycle Impacts of Power Plant Siting in the Historical United States," IZA Discussion Papers 18052, IZA Network @ LISER.
    19. Farid Farrokhi, 2021. "Skill, Agglomeration, And Inequality In The Spatial Economy," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 62(2), pages 671-721, May.
    20. Gan Jin & Günther G. Schulze, 2024. "Historical Legacies and Urbanization: Evidence from Chinese Concessions," CESifo Working Paper Series 10976, CESifo.
    21. Abuselidze, George, 2019. "Анализ На Формирането И Прилагането На Бюджетни Политики, Осигуряващи Социално-Икономическото Развитие На Административнотериториалните Единици [Analysis of the formation and use of budgetary policies ensuring the socio-economic development of ter," MPRA Paper 99889, University Library of Munich, Germany.
    22. Li, Zhen & Wu, Baijun & Wang, Danyang & Tang, Maogang, 2022. "Government mandatory energy-biased technological progress and enterprises' environmental performance: Evidence from a quasi-natural experiment of cleaner production standards in China," Energy Policy, Elsevier, vol. 162(C).

    More about this item

    Keywords

    ;
    ;
    ;

    JEL classification:

    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • N92 - Economic History - - Regional and Urban History - - - U.S.; Canada: 1913-
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecolet:v:178:y:2019:i:c:p:66-69. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ecolet .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.