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Self-Reinforcing Shocks: Evidence from a Resettlement Policy


  • Aki Kangasharju
  • Matti Sarvimäki


i. A completely revised version of this paper is available as SERCDP0080, May 2011. We examine the long-term effects of resettling 11 percent of the Finnish population from areas ceded to the Soviet Union during World War II. Our empirical strategy exploits features of the resettlement policy as a source of plausibly exogenous variation in population growth. The results suggest that a 10 percent increase in the population of a rural location during the war caused an additional 15 percent growth during the next five decades. The growth was driven by migration and led to the expansion of the non-primary sector. The effect is larger for locations connected to the railway network.

Suggested Citation

  • Aki Kangasharju & Matti Sarvimäki, 2010. "Self-Reinforcing Shocks: Evidence from a Resettlement Policy," SERC Discussion Papers 0047, Spatial Economics Research Centre, LSE.
  • Handle: RePEc:cep:sercdp:0047

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    More about this item


    Economic geography; agglomeration; migration;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • N94 - Economic History - - Regional and Urban History - - - Europe: 1913-

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