This talk explores the long-run consequences of forced migration and military occupation in post-WWII Central Europe. A large, fear-driven migration wave triggered by the advancing Soviet army set in motion lasting spatial disparities in both Austria and Germany. These initial displacement shocks created persistent agglomeration disadvantages in former Soviet zones, a sharp and growing East-West population gap driven by positively selected migrants, and durable shifts in political landscapes as fleeing Nazi sympathizers reshaped far-right voting patterns for generations. Firm relocation decisions reveal how displacement created new agglomeration opportunities. Together, the evidence illustrates how a brief historical shock can generate remarkable persistence through agglomeration effects, demographic selection, political transmission, and firm-level path dependence.

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