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The Long-lasting Shadow of the Allied Occupation of Austria on its Spatial Equilibrium

Author

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  • Eder, Christoph

    () (University of Linz)

  • Halla, Martin

    () (University of Linz)

Abstract

As a consequence of World War II, Austria was divided into four different occupation zones for 10 years. Before tight travel restrictions came into place, about 11 percent of the population residing in the Soviet zone moved across the demarcation line. We exploit this large internal migration shock to further our understanding of why economic activity is distributed unevenly across space. Our analysis shows that the distorted population distribution across locations has fully persisted until today (60 years after the demarcation line become obsolete). An analysis of more direct measures of economic activity shows an even higher concentration in the former non-Soviet zone. This gap in economic activity is growing over time, mainly due to commuting streams out of the former Soviet zone. This shows that a transitory shock is capable of shifting an economy to a new spatial equilibrium, which provides strong evidence for the importance of increasing returns to scale in explaining the spatial distribution of economic activity.

Suggested Citation

  • Eder, Christoph & Halla, Martin, 2016. "The Long-lasting Shadow of the Allied Occupation of Austria on its Spatial Equilibrium," IZA Discussion Papers 10095, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp10095
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    Cited by:

    1. Eder, Christoph & Halla, Martin, 2018. "On the Origin and Composition of the German East-West Population Gap," IZA Discussion Papers 12031, Institute of Labor Economics (IZA).
    2. Christian Ochsner, 2017. "Dismantled once, diverged forever? A quasi-natural experiment of Red Army misdeeds in post-WWII Europe," ifo Working Paper Series 240, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    3. Christoph Eder & Martin Halla, 2018. "On the Origin of the German East-West Population Gap," Economics working papers 2018-17, Department of Economics, Johannes Kepler University Linz, Austria.
    4. Sebastian Till Braun & Anica Kramer & Michael Kvasnicka, 2017. "Local Labor Markets and the Persistence of Population Shocks," Discussion Paper Series, School of Economics and Finance 201715, School of Economics and Finance, University of St Andrews.
    5. Christoph Eder, 2014. "Missing Men: World War II Casualties and Structural Change," NRN working papers 2014-03, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.
    6. Michael Wyrwich, 2018. "Migration restrictions and long-term regional development: evidence from large-scale expulsions of Germans after World War II," Jena Economic Research Papers 2018-002, Friedrich-Schiller-University Jena.
    7. Christian Ochsner, 2017. "Was wäre wenn… die Rote Armee im Sommer 1945 Ostdeutschland wieder verlassen hätte?Eine Antwort aus der Steiermark," ifo Dresden berichtet, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 24(05), pages 15-23, October.

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    More about this item

    Keywords

    spatial equilibrium; agglomeration effects; population shock; World War II; Austria;
    All these keywords.

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • N44 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Europe: 1913-
    • N94 - Economic History - - Regional and Urban History - - - Europe: 1913-

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