Abstract: We investigate the effects of forced migration on sending economies using the post-WW2 expulsion of German minorities from Hungary as a natural experiment. We combine historical and contemporary data sources to show that the forced migrations led to lasting reductions in economic activity. Plausible mechanisms driving this result appear to be sectoral change (shift towards agriculture) and skills differences between Germans and the settlers that replaced them. Our analysis reveals that forced migration can cause lasting regional inequalities in sending economies.
Keywords: Forced migration, Economic development, Minorities, Persistence, Regional inequality
JEL classification: N34, N94, R11, O12, O15
Cite as: Daniel Borbely, Ross Mckenzie, Forced migration and local economic development: Evidence from postwar Hungary, Journal of Development Economics, Volume 171, 2024, 103355, ISSN 0304-3878,
https://doi.org/10.1016/j.jdeveco.2024.103355