The Impact of a Local Human Capital Shock : Evidence from World War II Veterans

As a result of the GI Bill, returning World War II veterans were generally highly educated, but their locations following the war were uneven across cities in the US. Exploiting the spatial variation in the returning veterans driven by the network of veterans, I study the long run consequences of an increase in the local human capital. After the war, the shock produced a large and uneven increase in local skills. Furthermore, this shock had persistent effects on the local human capital during 1940–2010, and it greatly increased the local skill premium because of directed technical change after 1970