War Reparations, Structural Change, and Intergenerational Mobility.

This article analyzes the long-term industrial, local, and individual effects of Finland's war reparations to the Soviet Union from 1944 to 1952, which required Finland to export industrial products amounting to about 4% of its annual GDP. The Finnish state responded with extensive temporary support and investments in underdeveloped heavy industries to meet Soviet demands, leading to sustained increases in production, employment, and local industrialization in exposed sectors and regions. Using detailed Finnish and comparative Norwegian data, the study finds that these industrial policies also fostered higher educational attainment, increased incomes, and greater upward social mobility—especially among children from less-educated families—in municipalities more exposed to reparations production. The lasting effects are primarily driven by advanced, skill-intensive heavy industries and were supported by expanded local educational opportunities and exposure to export markets, illustrating how large-scale state-led industrial interventions can have multifaceted and persistent developmental impacts.