The bombing of Germany: the economic geography of war-induced dislocation in West German industry

This paper reveals the impact of wartime destruction in urban housing on regional economic growth in West Germany between 1939 and 1950. I demonstrate econometrically that the German economy remained severely dislocated as long as the urban housing stock had not been rebuilt. The recovery of urban industry was constrained by a war-induced labour shortage and, therefore, industrial capacities remained underutilized. In contrast, the growth of the rural economy was facilitated by labour expansion, which depressed industrial labour productivity. I apply instrumental variables to account for endogeneity and robust regressions to adjust for the impact of outliers.