This paper studies the long-run effects of the largest government spending program in US
history–Second World War defense spending–on structural change in local economies. We
link a dataset of war supply contracts with economic data at the county level spanning from
1930 to 2000. Using counties that received no defense spending as a comparison group
and controlling for prewar characteristics, we find that wartime defense spending led to
sustained reallocation of labor to manufacturing and other non-agricultural sectors in war …