SOEP Brown Bag Seminar

The physical destructions, expropriations, resettlements, and interruptions of international trade during Second World War caused a sharp reduction of wealth levels and inequality in many countries (Piketty, 2014). In Germany, an estimated 20 percent of the West German housing stock was destroyed. This paper assesses whether the effects of this destruction are measurable in the German wealth distribution today using unique data on the destruction of 1739 West German cities linked with recent micro data on household wealth portfolios provided by the Socio-economic Panel. For persons born in cities or villages that were more badly damaged then, wealth is still significantly lower today. Similarly, destruction of parents' cities or villages of birth has significant negative effects on the wealth of their children.  These detrimental effects on wealth holdings today are robust after controlling for a rich set of pre-war regional and city-level control variables.