Shizuka Inoue

I study how a larger supply of workers with managerial experience affects firm size and economic development, combining evidence from a natural experiment with a quantitative model. After World War II, three million Japanese civilians, many of them with managerial experience, were forced to return to Japan. I use repatriates' predetermined family-registry locations in Japanese districts to isolate exogenous variation in local inflows of workers with managerial experience. The inflow shifted employment from self-employment toward wage work and from agriculture toward manufacturing and services. Firms grew larger, expanded beyond their headquarters cities, and participated more in overseas programs teaching modern U.S. management practices. I develop a spatial model with occupational choice and multi-establishment firms to quantify the aggregate effects of managerial experience and the role of firms' geographic expansion. Managers supervise production within establishments and implement practices that raise productivity across the firm's establishment network. Removing the managerial experience of these repatriates lowers aggregate output per worker by about 3 percent. Firms' ability to expand geographically amplifies the output effect of managerial experience by about 25 percent.

Do wars push the communities that suffer them left or right? We argue that the answer depends on the nature of the loss: communities respond differently to losing people and losing places. We show this using data from Japan’s WWII experience, where military deaths, civilian bombing deaths, and urban destruction varied across cities for reasons plausibly unrelated to their politics. Across sixty-three years of elections, cities that lost more soldiers voted disproportionately for Japan’s right-wing, pro-rearmament Liberal Democratic Party (LDP), while cities that suffered more physical destruction voted for left-wing, pacifist parties. Civilian bombing deaths move the vote in the same direction as military deaths. This pattern reconciles why WWI battle deaths pushed interwar Italian and German communities toward the right while building destruction in the Blitz pushed British cities toward the left. Survey, testimony, and organizational data indicate that deaths created “martyrs” whose commemoration benefited the right, whereas devastation durably lowered pro-war “morale”. Our estimates imply that absent U.S. area bombing, the LDP would have won the two-thirds majority of Japan’s House of Representatives that is a necessary first step toward revising Japan’s pacifist constitution and rearming.