Working Paper: NBER ID: w12801
Authors: Joseph Cullen; Price V. Fishback
Abstract: Studies of the development of local economies often point to large-scale World War II military spending as a source of long-term economic growth, even though the spending declined sharply after the demobilization. We examine the longer term impact of the temporary war spending on county economies using a variety of measures of socioeconomic activity: including per capita retail sales, the extent of manufacturing, population growth, the share of women in the work force, housing values and ownership, and per capita savings over the period 1940-1950. We find that in the longer term counties receiving more war spending per capita during the war experienced extensive growth due to increases in population but not intensive growth, as the war spending had very small impacts on per capita measures of economic activity.
Keywords: World War II; military spending; local economic activity; retail sales; population growth
JEL Codes: H50; N32; N42; N92; R11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| World War II military spending (H56) | crowding-out effect on private sector production (E23) |
| elevated federal tax rates during the war (H56) | constraints on economic benefits of war spending (H56) |
| World War II military spending (H56) | overall medium-run impact (F69) |
| World War II military spending (H56) | per capita savings (D14) |
| World War II military spending (H56) | housing values (R31) |
| World War II military spending (H56) | population growth (J11) |
| World War II military spending (H56) | retail sales growth (L81) |