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July 11, 2023

Exposure to war and its labor market consequences

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What are the consequences of war for the labor market careers of the survivors? In a recent study we analyze this question using data on the wounded, on prisoners of war (POWs), and on persons displaced after World War II in Germany. We focus on men born between 1919 and 1921, nearly all of whom fought in the war. Many spent years in captivity and did not return to Germany until after the war ended, while others returned with gunshot wounds, amputations, or other serious injuries. In addition, we study the labor market trajectories of individuals who were displaced from their home region.
Unsurprisingly, war experiences have serious consequences for the subsequent employment biographies of the survivors. But some of the most drastic consequences become visible only decades after the war ends, when individuals approach the end of their working life. That is why it is crucial to follow people's entire career paths, not simply concentrate on their initial experiences.
For example, former soldiers experiencing war injuries had similarly high employment rates and occupational success as other veterans, but entered retirement significantly earlier. In contrast, former POWs postponed retirement, presumably to compensate for the loss of working time and income in their younger years. Former POWs also experienced less professional success compared to former soldiers who escaped captivity.
The consequences of displacement are more complex and depend heavily on the age the individual is displaced. The impact on education is most severe for young individuals, who are transitioning from school to vocational training. Young men lost an average of 0.7 years of education due to displacement, women 0.4 years with corresponding negative effects on their subsequent economic success. The employment loss was particularly severe for older people and women, many of whom never returned to the labor market. For example, women aged 40-50 at the time of expulsion lost on average more than two years of employment, as nearly half of those who were employed before the expulsion left the labor market in 1945.
These patterns are consistent with the theoretical implications from standard economic models, suggesting that what we observed for Germany from 1945 onward may extend to other conflicts. For example, in the context of the Russian war of aggression against Ukraine, we would expect that wounded Russian and Ukrainian soldiers will not be missing from the labor market in the immediate postwar period. Decades from now, however, when these veterans approach retirement age, we might expect that they will leave the labor force and retire earlier than others. One more immediate concern is that displaced women and men might exit the labor market permanently, or that their displaced children might miss out on educational investments and qualifications that would be important for their later careers.

© Sebastian T. Braun and Jan Stuhler

Sebastian Braun is professor of economics at Bayreuth University and an IZA Research Fellow
Jan Stuhler is associate professor of economics at Universidad Carlos III in Madrid and an IZA Research Fellow 

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