Public Investment and the Spread of "Good-Paying" Manufacturing Jobs: Evidence from World War II's Big Plants

This paper studies the long-run local labor market effects of the publicly financed construction of large manufacturing facilities during World War II. I focus on a subset of large, new plants on which the military was not able to incentivize private firms to stake any capital and that likely would not have been built if not for the war. I compare recipient counties to counties that were similar but for conditions engendered by the war. After establishing an absence of pre-trends across a number of outcomes, I show that recipient counties experienced a large post-reconversion boost in manufacturing employment and wages that persisted for several decades. I show how these effects impact broader labor market outcomes in the post-war period and discuss methods for distinguishing between causal mechanisms using plant-level data.