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 highly uneven across cities in the USA. Exploiting the spatial variation in these returning veterans driven by prewar communities of veterans, I study the long-run persistence of an increase in local human capital. While there is strong persistence in skills across cities, this shock produced a large and uneven increase in local skills after the war. Furthermore, this positive shock had long-lasting effects on local human capital from 1940 to 2010. [ABSTRACT FROM AUTHOR]