Economic History Workshop - Discrimination, Managers, and Firm Performance: Evidence from “Aryanizations” in Nazi Germany

Many episodes of discrimination have led to the exclusion of highly qualified individuals from important positions in the economy. This workshop explores how we may quantify economic losses resulting from these episodes. Specifically, Professor Fabian Waldinger investigates how the forced removal of managers with Jewish origins in Nazi Germany affected large firms.The loss of Jewish managers significantly reduced the stock prices of affected firms, for at least 10 years after the Nazis came to power. Professor Fabian Waldinger’s paper finds strong stock price reductions for firms where the removal of the Jewish managers led to large decreases in managerial connections to other firms and in the number of university-educated managers. Dividend payments and returns on assets also declined. A back-of-the-envelope calculation suggests that the aggregate market valuation of firms listed in Berlin fell by 1.8 percent of German GNP. His findings imply that discrimination can lead to first-order economic losses.