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World War II and US Economic Performance

In: Economic History of Warfare and State Formation

Author

Listed:
  • Price V. Fishback

    (University of Arizona)

  • Taylor Jaworski

    (Queen’s University)

Abstract

One popular view is that World War II ended the Great Depression and led to a postwar boom in the United States. On the other hand, recent studies suggest that the reallocation of resources to meet war demands may have imposed more costs than benefits. In the first part of this chapter we review recent evidence on the war’s impact on the United States economy at both the national and local levels. In the second part we extend recent work on the impact of World War II on local economies. We use a simple spatial equilibrium model and data for all United States counties to estimate the long-run impact of the war-related spending on income per capita, population, and median housing values per decade from 1960 to 2010. The empirical results show that the main changes in local economies were due to the reallocation of population toward counties that received more per capita war spending. The War was associated with very little growth in income per capita and median house values. When combined with the model, these results suggest that mobilization for World War II was mostly correlated with an increase in the value of local amenities, which were likely related to the proximity to defense-related industries and associated non-wage benefits.

Suggested Citation

  • 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.
    • Handle: RePEc:spr:stechp:978-981-10-1605-9_9
    DOI: 10.1007/978-981-10-1605-9_9
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    Cited by:

    1. 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).
    2. 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.
    3. Jung, Yeonha, 2018. "The Legacy of King Cotton: Agricultural Patterns and the Quality of Structural Change," SocArXiv trjfz, Center for Open Science.

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