Escaping Labor Scarcity: Innovation and Human Capital after WW1 in France

Abstract
We use quasi-random local variations in the number of young men who died as a result of World War I to estimate the impact of this demographic shock on innovation and structural change in France. Our analysis shows that excess mortality led to an increase in patenting activity in counties with high pre-war education levels, driven predominantly by innovations in labor-saving technologies. Our estimates imply that an additional 6,000 patents were filed in the 15 years following the war, amounting roughly to the average annual number of patents filed pre-war. On the contrary, we show that the direct death of inventors (as opposed to general mortality) has a negative effect on subsequent patenting activity. We find a positive association between war-related mortality and wage growth as well as with the adoption of machine in the agricultural sector, providing additional evidence that incentives to escape labor scarcity are driving the innovation response to mortality.