Abstract
One popular view is that World War II ended the Great Depression and led to a postwar boom in the United States. On the other hand, recent studies suggest that the reallocation of resources to meet war demands may have imposed more costs than benefits. In the first part of this chapter we review recent evidence on the war’s impact on the United States economy at both the national and local levels. In the second part we extend recent work on the impact of World War II on local economies. We use a simple spatial equilibrium model and data for all United States counties to estimate the long-run impact of the war-related spending on income per capita, population, and median housing values per decade from 1960 to 2010. The empirical results show that the main changes in local economies were due to the reallocation of population toward counties that received more per capita war spending. The War was associated with very little growth in income per capita and median house values. When combined with the model, these results suggest that mobilization for World War II was mostly correlated with an increase in the value of local amenities, which were likely related to the proximity to defense-related industries and associated non-wage benefits.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
Real GDP is series Ca11 (p. 3–25), the information on employment and unemployment came from series Ba470, Ba474, Ba475, and Ba777 (pp. 2–82, 2–83), population is series Aa7, pp. 1–28, 1–29. These data are from Carter et al. (2006). The labor markets were still influenced by the presence of emergency work relief agencies like the Works Progress Administration, which provided work for poor families and paid for poor families at roughly half pay. The employment and unemployment rate figures above treat such workers as employed. If they are treated as unemployed, the employed as a share of population is 37.7 %, 0.3 % lower than in 1929 and the unemployment rate is 9.9 %.
References
Barro, Robert J. 1981. Output effects of government purchases. Journal of Political Economy 89(6): 1086–1121.
Bateman, Fred, Jamie Ros, and Jason E. Taylor. 2009. Did new deal and World War II public capital investments facilitate a ‘Big Push’ in the American South? Journal of Institutional and Theoretical Economics 165(2): 307–341.
Blanchard, Olivier Jean, and Lawrence F. Katz. 1992. Regional evolutions. Brookings Papers on Economic Activity, pp. 1–75.
Carter, Susan, Sigmund Carter, Scott, Haines, Michael, Olmstead, Alan, Sutch, Richard, and Wright, Gavin. 2006. Historical statistics of the United States: Earliest times to the present, millennial edition. New York: Cambridge University Press.
Combes, Richard S. 2001. Aircraft manufacturing in Georgia: A case study of federal industrial investment. In The second wave: Southern industrialization from the 1940s to the 1970s, ed. Philip Scranton. Athens: University of Georgia Press.
Council of Economic Advisors. 1995. Economic report of the president: Transmitted to the Congress February 1995. United States Government Printing.
Field, Alexander J. 2008. The impact of the second World War on us productivity growth. Economic History Review 61(3): 672–694.
Field, Alexander J. 2011. A great leap forward: 1930s depression and U.S. economic growth. New Haven: Yale University Press.
Fishback, Price V., and Joseph A. Cullen. 2013. Second World War spending and local economic activity in US counties, 1939–58. Economic History Review 66(4): 975–992.
Fishback, Price V., William C. Horrace, and Shawn Kantor. 2005. Did new deal grant programs stimulate local economies? A study of federal grants and retail sales during the great depression. Journal of Economic History 65(1): 36–71.
Glaeser, Edward L. 2008. Cities, agglomeration, and spatial equilibrium. Oxford: Oxford University Press.
Glaeser, Edward L., and Kristina Tobio. 2008. The rise of the sunbelt. Southern Economic Journal 74(3): 610–643.
Goldin, Claudia D. 1980. War in American economic history. In The encyclopedia of American economic history, vol. 3, ed. Glenn Porter, 73–140. New York: Scribner’s and Sons.
Gordon, Robert J., and Robert Krenn. 2010. The end of the great depression 1939–41: Policy contributions and fiscal multipliers. Technical report, National Bureau of Economic Research.
Haines, Michael R. 2010. Historical, demographic, economic, and social data: The United States, 1790–2000, volume ICPSR02896-v3. Inter-university Consortium for Political and Social Research [distributor], Ann Arbor.
Higgs, Robert. 1987. Crisis and leviathan: Critical episodes in the growth of American government. Oxford: Oxford University Press.
Higgs, Robert. 2006. Private profit, public risk: Institutional antecedents of the modern military procurement system in the rearmament program of 1940–41. In Depression, war, and Cold War: Studies in political economy, ed. Robert Higgs. Oxford: Oxford University Press.
Jaworski, Taylor. 2015. World War II and the industrialization of the American South, 1930–1960.
Koistinen, Paul A.C. 2004. Arsenal of World War II: The political economy of American warfare, 1940–1945. Lawrence: University Kansas Press.
Krugman, Paul. 2011. Oh! What a lovely war! New York Times, 15 Aug 2011.
Lewis, Robert. 2007. World War II manufacturing and the postwar southern economy. Journal of Southern History 73(4): 837–866.
Markusen, Ann, Peter Hall, Scott Campbell, and Sabina Deitrick. 1991. The rise of the Gunbelt: The military remapping of industrial America. Oxford: Oxford University Press.
Nash, Gerald D. 1990. World War II and the west: Reshaping the economy. Lincoln: University of Nebraska Press.
Rhode, Paul W. 2003. After the war boom: Reconversion on the pacific coast, 1943–1949. In History matters: Essays on economic growth, technology, and demographic change, ed. Timothy Guinnane, William Sundstrom, and Warren Whatley. Stanford: Stanford University Press.
Rockoff, Hugh. 2012. America’s economic way of war: War and the US economy from the Spanish-American war to the Persian gulf war. Cambridge: Cambridge University Press.
Romer, Christina D. 2011. The hope that flows from history. New York Times, 13 Aug 2011.
Ruggles, Steven, Katie Genadek, Ronald Goeken, Josiah Grover, and Matthew Sobek. 2015. Integrated public use microdata series: Version 5.0 [machine-readable database]. Minneapolis: University of Minnesota.
Siu, Henry E. 2008. The fiscal role of conscription in the us world war ii effort. Journal of Monetary Economics 55(6): 1094–1112.
Smith, R. Elberton. 1959. The army and economic mobilization. Washington, DC: GPO.
U.S. Department of Commerce Bureau of Economic Analysis. 2015. Regional economic accounts.
US Selective Service System. 1948. Special Monograph No. 12. Government Printing Office, Washington, DC.
Vernon, J.R. 1994. World War II fiscal policies and the end of the great depression. Journal of Economic History 54(4): 850–868.
White, Gerald T. 1980. Billions for defense: Government finance by the defense plant corporation during World War II. Tuscaloosa: University Alabama Press.
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2016 Editors
About this chapter
Cite this chapter
Fishback, P.V., Jaworski, T. (2016). World War II and US Economic Performance. In: Eloranta, J., Golson, E., Markevich, A., Wolf, N. (eds) Economic History of Warfare and State Formation. Studies in Economic History. Springer, Singapore. https://doi.org/10.1007/978-981-10-1605-9_9
Download citation
DOI: https://doi.org/10.1007/978-981-10-1605-9_9
Published:
Publisher Name: Springer, Singapore
Print ISBN: 978-981-10-1604-2
Online ISBN: 978-981-10-1605-9
eBook Packages: Economics and FinanceEconomics and Finance (R0)