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The shadows of the socialist past: Lack of self-reliance hinders entrepreneurship

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  • Bauernschuster, Stefan
  • Falck, Oliver
  • Gold, Robert
  • Heblich, Stephan

Abstract

We provide empirical evidence that the experience of a socialist regime leads to a lack of self-reliance by comparing East and West Germans conditional on regional differences in current economic development. This meaningful lack of self-reliance persists after the regime's breakdown and hinders the development of an entrepreneurial spirit, which might hamper the transition process. Since East Germany adopted the formal institutions of a market economy quasi overnight when reunifying with West Germany, we avoid simultaneity issues regarding current institutions and preferences. Further tentative evidence suggests that the socialist regime also affected the composition of the East German population by inducing selective migration before the construction of the Berlin Wall in 1961.

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Bibliographic Info

Article provided by Elsevier in its journal European Journal of Political Economy.

Volume (Year): 28 (2012)
Issue (Month): 4 ()
Pages: 485-497

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Handle: RePEc:eee:poleco:v:28:y:2012:i:4:p:485-497

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Web page: http://www.elsevier.com/locate/inca/505544

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Keywords: Self-reliance; Entrepreneurship; Socialism; Capitalism;

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References

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Cited by:
  1. Facchini, François & Melki, Mickaël, 2013. "Efficient government size: France in the 20th century," European Journal of Political Economy, Elsevier, Elsevier, vol. 31(C), pages 1-14.
  2. Kauder, Björn & Potrafke, Niklas, 2013. "Government ideology and tuition fee policy: Evidence from the German States," Munich Reprints in Economics, University of Munich, Department of Economics 19532, University of Munich, Department of Economics.
  3. Thomas P. Triebs & Justin Tumlinson, 2013. "Learning Capitalism the Hard Way—Evidence from Germany's Reunification," NBER Working Papers 19209, National Bureau of Economic Research, Inc.
  4. Necker, Sarah & Voskort, Andrea, 2013. "The evolution of German's values since reunification," Freiburg Discussion Papers on Constitutional Economics 13/13, Walter Eucken Institut e.V..
  5. Boenisch, Peter & Schneider, Lutz, 2013. "The social capital legacy of communism-results from the Berlin Wall experiment," European Journal of Political Economy, Elsevier, Elsevier, vol. 32(C), pages 391-411.

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