Forced Migration and Industry Diffusion

The paper presented in this ZEW Research Seminar studies whether and how migrants transmit industries across space. The authors exploit the forced expulsion of eight million ethnic Germans from Central and Eastern Europe after World War II as a natural experiment to identify the causal impact of migrant specialization on regional industry development in postwar West Germany. Combining newly digitized records from the 1939 business census with data on expellees’ origins and destinations, they construct a measure of human capital embedded in migrant inflows at the county–industry level. Their results show that industries in which arriving migrants had been specialized before the war experienced significantly faster employment growth after resettlement. An instrumental variable strategy based on the exogenous allocation of trains during the 1946 organized transports confirms that this relationship is causal. Because migrants were prohibited from taking machinery or financial assets and were soon cut off from their home regions by the Iron Curtain, the transmission must have occurred through human capital broadly construed - skills, blueprints, and personal networks.