Immigration and Development: German-Speaking Agricultural Settlers in the Kingdom of Hungary

After prolonged warfare between the Habsburg and Ottoman Empires, German-speaking immigrants helped repopulate newly conquered Hungarian lands during the 18th century. Exploiting spatial variation across more than four thousand villages in regions subject to resettlement and German immigration, we find that proximity to 18th-century German settlements predicted higher farm productivity until the early 20th century. Consistent with historical accounts, we explain this persistent productivity effect with the higher human capital and intensive agrarian specialization of German farmers. Development gains from German immigration diffused slowly and only locally, driven by the limited geographical dispersion of Germans, not by inter-ethnic knowledge transmission.