Immigration and Regional Economic Developement: A case Study in post-World War Two Baden-Wüttemberg

Abstract: The thesis investigates how the inflow of ethnic Germans, into western Germany, influenced the sectoral development. During and after the Second World War Germany experienced a huge inflow of ethnic Germans who lived in eastern Europe before the War. The study fo-cused on the federal state of Baden-Württemberg which was split into a French and Ameri-can occupation zone. This resulted in different immigration regimes, influencing the share of expellees in the two regions. This quasi-natural experiment is used to establish a new in-strumental variable approach to measure the impact of a locally, uneven labor supply shock. To measure the economic development, I created a panel data set on the administrative dis-trict level spanning from 1926 to 1970. The results are suggesting a substantially, positive impact on the regional economy as a whole, while results are too ambiguous to confirm the effects on sectoral change.