Aerial Bombardments Early in Life and the Ensuing Shape of the Age-Earnings Profile over the Full Working Life

Wars are an ongoing part of life across the globe. Aerial bombardments while in utero and around birth involve exposure to severe stress and hence may lead to long-run effects on health and abilities at high ages. The authors of the study presented in this Mannheim Applied Seminar exploit variation in temporal and regional exposure to bombardments, including those on the civilian population, in Germany among birth cohorts 1942-1949. The authors examine economically relevant effects on the full age-earnings profile including the age at which effects on individual labor earnings kick in and the retirement age. Population administrative data covering millions of individuals merge records of birth place and birth date to individual earnings time series over the working life and to historical sources of daily bombardments per municipality as well as qualitative contextual information. Estimation invokes municipality and individual fixed-effect methods. They allow for effects by gestational month of exposure and their interactions with ages later in life. The findings provide sizeable lower bounds for long-run costs of exposure to war and stress early in life.