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Neighborhood Effects: Evidence from Wartime Destruction in London

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  • Redding, Stephen
  • Sturm, Daniel

Abstract

We use the German bombing of London during the Second World War as an exogenous source of variation to provide evidence on neighborhood effects. We construct a newly-digitized dataset at the level of individual buildings on wartime destruction, property values, and socioeconomic composition in London before and after the Second World War. We develop a quantitative urban model, in which heterogeneous groups of individuals endogenously sort across locations in response to differences in natural advantages, wartime destruction and neighborhood effects. We find strong and localized neighborhood effects, which magnify the direct impact of wartime destruction, and make a substantial contribution to observed differences in socioeconomic outcomes across locations.

Suggested Citation

  • Redding, Stephen & Sturm, Daniel, 2024. "Neighborhood Effects: Evidence from Wartime Destruction in London," CEPR Discussion Papers 18998, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:18998
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    2. Donald R. Davis & Matthew Easton & Stephan Thies, 2025. "Segregation, spillovers and the locus of racial change," CEP Discussion Papers dp2125, Centre for Economic Performance, LSE.
    3. Deininger, Klaus W. & Ali, Daniel Ayalew & Nataliia, Kussul & Lemoine, Guido & Shelestov, Andrii & Shumilo, Leonid, 2025. "Using Remotely Sensed Data to Assess War-Induced Damage to Agricultural Cultivation : Evidence from Ukraine," Policy Research Working Paper Series 11221, The World Bank.
    4. Gorjian, Mahshid, 2025. "Statistical and Methodological Advances in Spatial Economics: A Comprehensive Review of Models, Empirical Strategies, and Policy Evaluation," MPRA Paper 125636, University Library of Munich, Germany.

    More about this item

    Keywords

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    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • N9 - Economic History - - Regional and Urban History
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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