78/2012 Fabian Waldinger

This paper analyses the effects of human capital (HC) and physical capital (PC) for the productivity of science departments. To address the endogeneity of input choices I use two extensive but temporary shocks to the HC and PC of science departments. As HC shock I use the dismissal of mostly Jewish scientists in Nazi Germany. As PC shock I use the destruction of facilities by Allied bombings during WWII. In the short run, a 10 percent to HC lowered departmental productivity by about 0.21sd. A 10 percent shock to PC lowered departmental productivity by about 0.05sd in the short run. While the HC shock persisted until the end of my sample period (1980), departments experiencing a PC shock recovered very quickly (by 1961). Additional results show that the dismissal 'star scientists' was particularly detrimental, and that a fall in the quality of hires was an important mechanism for the persistence of the HC shock.

Economic History

The Review of Economics and Statistics

https://doi.org/10.1162/REST_a_00565