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The Cold War and the U.S. Labor Market

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  • Ilyana Kuziemko
  • Donato A. Onorato
  • Suresh Naidu

Abstract

We argue that the Cold War contributed to the inclusive growth of the post-war decades. On the labor-demand side, we isolate exogenous shifts in military procurement across states and firms. We show that military procurement increases manufacturing employment and reduces inequality. Overall, the 1950s-to-1990s decline in defense production explains roughly one-quarter of the decline in manufacturing employment and nearly one-tenth of the rise of top-ten income share. On the labor-supply side, the Cold-War-era draft removed millions of young men from the labor force, significantly reducing young male civilian unemployment. Military procurement also increased voter support for hawkish foreign policy.

Suggested Citation

  • Ilyana Kuziemko & Donato A. Onorato & Suresh Naidu, 2026. "The Cold War and the U.S. Labor Market," NBER Working Papers 35008, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:35008
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    More about this item

    JEL classification:

    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • N42 - Economic History - - Government, War, Law, International Relations, and Regulation - - - U.S.; Canada: 1913-

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