The Productivity Impact of World War II Mobilization in the United States

Abstract

Claims that the experience of economic mobilization between 1942 and 1945 laid the supply foundations for output and productivity growth in the United States after the war have formed the basis of the conventional wisdom for decades. In fact, between 1941 and 1948, total factor productivity within manufacturing declined, and fell even more sharply during the war. The war forced a radical shift towards goods in which the manufacturing sector had little experience, where initial productivity levels were low. The learning that took place in the mass production of ships, aircraft, and other munitions had little relevance for the postwar period because the wartime output mix and implicit factor prices were unique to that period. Considering together the effects on TFP, the labor force, and the physical capital stock, the longer term impact of mobilization on the level and trajectory of US potential output was, on balance, almost certainly negative.

Keywords: Productivity, Learning by Doing, World War II

JEL Classification: O47, O51, N12