Habit Formation and the Misallocation of Labor: Evidence from Forced Migrations
No Thumbnail Available
Access rights
openAccess
URL
Journal Title
Journal ISSN
Volume Title
A1 Alkuperäisartikkeli tieteellisessä aikakauslehdessä
This publication is imported from Aalto University research portal.
View publication in the Research portal (opens in new window)
View/Open full text file from the Research portal (opens in new window)
View publication in the Research portal (opens in new window)
View/Open full text file from the Research portal (opens in new window)
Date
2022-12
Department
Major/Subject
Mcode
Degree programme
Language
en
Pages
42
Series
Journal of the European Economic Association
Abstract
We use a research design created by forced migrations to examine the costs and benefits of leaving agriculture in mid-20th century Finland. After World War II, 11% of the Finnish population were resettled from areas ceded to the Soviet Union. Entire rural communities were moved to locations that resembled the origin areas, and displaced farmers were given land and assistance to establish new farms. Despite this policy of reconstructing the pre-war situation, forced migration increased the likelihood of switching to non-agricultural jobs and moving to urban areas. Consequently, forced migration also increased the long-term income of the displaced rural population. By contrast, forced migration decreased the income of the resettled urban population. We examine the extent to which these effects can be explained by the quality of the new farms, human capital investments, networks and discrimination but do not find evidence supporting these mechanisms. Instead, we argue that habit formation towards residential locations provides the most compelling rationalization for our results.Description
Keywords
Other note
Citation
Sarvimäki, M, Uusitalo, R & Jäntti, M 2022, ' Habit Formation and the Misallocation of Labor: Evidence from Forced Migrations ', Journal of the European Economic Association, vol. 20, no. 6, pp. 2497-2539 . https://doi.org/10.1093/jeea/jvac037