Working Paper
The economic effects of rearmament: evidence from Nazi Germany
Kiel Working Papers, 2322
Authors
Publication Date
JEL Classification
JEL C21
E62
H56
J63
N14
N44
Key Words
Related Topics
Political Economy
Economic Policy in Germany
Using novel archival data on the German Luftwaffe, I estimate the causal effect of military spending on unemployment in Nazi Germany between 1932 and 1936. Exploiting cross-district variation of supplier locations, I estimate the impact of military procurement on local labor market outcomes. I find that the average supplier location experienced a decline in unemployment per capita of approximately 6 percentage points. A back-of-the-envelope calculation suggests that total military spending represents around 32% of the observed aggregate fall in unemployment. I also find evidence of significant spillovers, indicating that my results likely underestimate the true effect of military spending.
