Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/146140
Authors: 
Eder, Christoph
Halla, Martin
Year of Publication: 
2016
Series/Report no.: 
Working Papers in Economics and Statistics 2016-23
Abstract: 
As a consequence of World War II, Austria was divided into four di.erent occupation zones for 10 years. Before tight travel restrictions came into place, about 11 percent of the population residing in the Soviet zone moved across the demarcation line. We exploit this large internal migration shock to further our understanding of why economic activity is distributed unevenly across space. Our analysis shows that the distorted population distribution across locations has fully persisted until today (60 years after the demarcation line become obsolete). An analysis of more direct measures of economic activity shows an even higher concentration in the former non-Soviet zone. This gap in economic activity is growing over time, mainly due to commuting streams out of the former Soviet zone. This shows that a transitory shock is capable of shifting an economy to a new spatial equilibrium, which provides strong evidence for the importance of increasing returns to scale in explaining the spatial distribution of economic activity.
Subjects: 
spatial equilibrium
agglomeration effects
population shock
World War II
Austria
JEL: 
R11
R12
R23
J61
N44
N94
Document Type: 
Working Paper

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