Matti Sarvimäki looks at the long-term economic outcomes for Finns displaced by the 1939 Soviet invasion.

Matti Sarvimäki

English

Research Papers in Economics

CentrePiece Autumn 2009
24
More than 400,000 Finns were forced to leave their
homes as a result of the Soviet invasion in 1939.
Research by Matti Sarvimäki and colleagues finds
evidence of a surprisingly positive impact on the
economic outcomes of the displaced people more than
three decades later.
The unexpected 
consequences 
of forced migration
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A
few hours after the 
Soviet aircraft had
attacked the Finnish
village of Kiviniemi on 
30 November 1939, a
messenger arrived at the Uosukainen
family farm. He commanded the women
and children to make their way to the
train station and said that everyone was
allowed to bring just one suitcase, nothing
more. Mrs Uosukainen packed in haste,
climbed onto a sleigh with her children
and sister, and rode to the station.
1
They were not alone. More than a
tenth of the Finnish population was
permanently displaced during the Second
World War as the eastern parts of the
country were ceded to the Soviet Union.
At the time, Finland was a middle-
income developing country by today’s
standards. It had won independence just
two decades earlier, gone through a short
but brutal civil war and then evolved into
a reasonably well functioning democracy.
Half of the population was working in
agriculture, typically owning small farms
and working as hired labour in forestry
during the winter.
When the war ended, the country of
four million had suffered relatively minor
civilian casualties. But 92,000 men had
died in battle and more than 200,000
were injured. Much of the production
capacity was destroyed and large war
reparations were due. On top of this,
430,000 people were displaced.
To cope with the situation, the Finnish
parliament decided that the displaced
people would be compensated for their
lost property, financing the compensation
by levying a massive tax on capital.
Displaced people in urban areas received
compensation in government bonds, while
displaced farmers were given agricultural
land. Since the amount of publicly owned
land available was insufficient, half of the
distributed fields were expropriated from
private farmers living in their farms. 
In 1950, the Uosukainen family had
another visitor. This time the matter was
far less dramatic: Finland was conducting
its first full census and the man was there
to help fill in the questionnaire.
The census form included a large set
of questions about the family’s current
situation as well as retrospective questions
on the pre-war municipality of residence,
socio-economic status and industry. The
answers were then coded to punch cards
and transformed to reports published
during the next eight years. The original
forms were sorted by municipality,
archived into boxes and largely forgotten.
Fifty years later, Statistics Finland drew
1 The recollection of Mrs Uosukainen’s daughter is available in Finnish at:
http://www.sakkola.fi/tarinat/uosukainen-1.htm
Finnish men
displaced 
by the war earned
substantially
more in later life
than otherwise
similar men who
were not forced
to migrate
a sample of every tenth box of the
original census forms. Most of the
information was keyed into a database.
These data were then merged with later
censuses, creating a large dataset that
follows a random sample of the Finnish
population and their children for more
than six decades. 
Our research uses a subset of these
data to study the long-term effects of
displacement on those forced to migrate.
We focus on the cohorts born between
1907 and 1925 – those who were at least
14 years old at the beginning of the war
and still of working age in 1971, when we
first observe their tax records.
Analysis of these data shows that the
pre-war economic status of those who
later became displaced was similar to the
rest of the population. But more than three
decades later, the displaced men were
earning substantially more than otherwise
similar men who had not been forced to
migrate. This result survives a battery of
checks for robustness, so we interpret it as
indicating a causal relationship. 
What happened? According to our
research, the most likely answer is that
forced migration increased people’s
mobility both in terms of geography 
and occupation. Of course, the 
displaced were geographically mobile
during the war. Less obviously, they were
more likely to move from traditional to
modern occupations. They also remained
geographically more mobile 
even after resettlement.
Most of these migrations were from
the countryside to the cities. This capacity
to adapt to the changing circumstances
turned out to be valuable in the rapidly
urbanising and industrialising post-war
Finland – at least for men. While theCentrePiece Autumn 2009
26
crofters (tenants of very small farms), who
wanted the right to buy the land they
were renting. And the resettlement of the
displaced was fiercely debated in the
Finnish parliament, with representatives of
the Swedish-speaking parts of the country
managing to exempt their constituencies
from giving up virtually any land.
In short, the resettlement policies were
not implemented as a consequence of
Finland being an exceptionally harmonious
society. Rather, pragmatism and fear of
further unrest are the most likely
explanation for these policies.
Our results also point towards a
broader lesson about the importance of
mobility. While economists have long
argued that the returns to migration are
positive and potentially large, hard
evidence has been scarce.
The reason is that migrants are
typically a highly self-selected group.
Hence correlations between migrant status
and economic outcomes are not likely to
be informative about the causal effect of
migration. Since we are able to study the
impact of migration in a ‘quasi-
experimental’ setting, this selection
problem does not occur. 
Of course, one should not extrapolate
too freely from these results to current
policy debates. Yet, the results are
consistent with the argument that policies
promoting mobility – both in terms of
occupation and geography – are likely to
promote growth.
estimates for urbanisation among 
women are comparable to those of men,
we find no impact on income. This
suggests that later migrations were likely
to be driven by the labour market
considerations of husbands.
Our findings illustrate that while forced
migrations can be tragic, good policies can
prevent the displaced becoming an
impoverished underclass. The Finnish policy
consisted of providing land and monetary
compensation for lost property. Those
given land were free to sell it. Everyone
remained free to choose where to live. So
the policy provided the means to start over
but did not lock the displaced into
traditional work.
It may be tempting to think that such
policies were possible only in a country
with a homogenous population and well
functioning institutions. But it is not
evident that Finland was such a country in
the 1940s.
For example, one of the reasons for
the civil war in 1918 was a dispute about
land, notably between landowners and
This article summarises ‘Long-term Effects of
Forced Migration’ by Matti Sarvimäki,
Roope Uusitalo and Markus Jäntti, Discussion
Paper No. 15 of the Spatial Economics
Research Centre (SERC) at LSE
(http://www.spatialeconomics.ac.uk/textonly/
SERC/publications/download/sercdp0015.pdf).
Matti Sarvimäki is a research economist at
SERC and CEP . Roope Uusitalo is at the
Government Institute for Economic Research
in Helsinki. Markus Jäntti is at Stockholm
University.
Policies to promote
occupational and
geographical mobility are
likely to be good for
economic growth
While forced migrations can be
tragic, good policies can prevent the
displaced becoming an
impoverished underclass
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The unexpected consequences of forced migration

http://cep.lse.ac.uk/pubs/download/cp297.pdf

The unexpected consequences of forced migration

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