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The long-term implications of destruction during the Second World War on private wealth in Germany

Author

Listed:
  • Christoph Halbmeier

    (Helmut Schmidt University
    German Institute for Economic Research (DIW Berlin))

  • Carsten Schröder

    (German Institute for Economic Research (DIW Berlin)
    Freie Universität Berlin)

Abstract

By the end of the Second World War, an estimated 20% of the West German housing stock had been destroyed. Building on a theoretical life-cycle model, this paper examines the persistent consequences of the war for individual wealth across generations. As our empirical basis, we link a unique historical dataset on the levels of wartime destruction in 1739 West German cities with micro data on individual wealth at the beginning of the twenty-first century from the German Socio-Economic Panel. Among individuals born in cities or villages that were badly damaged during the Second World War, wealth is still about 10% lower today. Similarly, the destruction of parental birthplace has significant negative implications for the wealth of their descendants. These negative implications are robust after controlling for a rich set of pre-war regional and city-level control variables. In complementary empirical exercises, we study potential channels such as inheritances, health, and education, through which the wartime destruction could have affected wealth accumulation across generations.

Suggested Citation

  • Christoph Halbmeier & Carsten Schröder, 2025. "The long-term implications of destruction during the Second World War on private wealth in Germany," Journal of Economic Growth, Springer, vol. 30(1), pages 161-235, March.
    • Handle: RePEc:kap:jecgro:v:30:y:2025:i:1:d:10.1007_s10887-024-09242-2
    DOI: 10.1007/s10887-024-09242-2
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    More about this item

    Keywords

    Wealth; Second World War; Destruction; Socio-Economic Panel (SOEP); Life-cycle models;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • N34 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Europe: 1913-
    • N44 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Europe: 1913-

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