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Persistent anti-market culture: A legacy of the Pale of Settlement and of the Holocaust

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  • Grosfeld, Irena
  • Rodnyansky, Alexander
  • Zhuravskaya, Ekaterina

Abstract

We investigate the long-term effects of the important presence of Jews in Eastern Europe before the Second World War and their disappearance during the Holocaust. The Pale of Settlement, the area which Jewish residents were confined to in the Russian Empire, is used as a source of exogenous variation in the size of the Jewish population before the Second World War. Based on election and survey data, we find that current residents of the Pale, compared to their counterparts outside the Pale, vote more for socialist anti-market parties, have lower support for the market economy and democracy, are less engaged in entrepreneurship, but exhibit higher levels of trust. At the same time, the Pale has no lasting effects on average consumption, income, and education levels. Regression discontinuity at the Pale border helps identification. We show that the effect of the Pale is related to the former presence of Jews rather than the inflow of new migrant population into the formerly-Jewish areas. We suggest a possible mechanism and present evidence consistent with it: the non-Jewish population, at the time when two groups lived together side-by-side, developed a persistent anti-market culture and bonding trust, rooted in ethnic hatred towards Jews. We show that, consistent with the mechanism, current residents of towns closer to places of pogroms exhibit higher trust and anti-market attitudes even controlling for the historical share of Jews in the population and the Pale.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 8316.

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Date of creation: Apr 2011
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Handle: RePEc:cpr:ceprdp:8316

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Keywords: anti-market; bonding trust; Holocaust; Pale of Settlement; persistent culture; pogrom;

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References

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  13. Greif, Avner, 1994. "Cultural Beliefs and the Organization of Society: A Historical and Theoretical Reflection on Collectivist and Individualist Societies," Journal of Political Economy, University of Chicago Press, vol. 102(5), pages 912-50, October.
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Citations

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Cited by:
  1. Akbulut-Yuksel, Mevlude & Yuksel, Mutlu, 2011. "The Long-Term Direct and External Effects of Jewish Expulsions in Nazi Germany," IZA Discussion Papers 5850, Institute for the Study of Labor (IZA).
  2. Mathieu Couttenier & Marc Sangnier, 2012. "Living in the Garden of Eden: Mineral Resources Foster Individualism," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 12.05, Université de Lausanne, Faculté des HEC, DEEP.
  3. Grosfeld, Irena & Zhuravskaya, Ekaterina, 2013. "Persistent effects of empires: Evidence from the partitions of Poland," CEPREMAP Working Papers (Docweb) 1311, CEPREMAP.
  4. Nico Voigtländer & Joachim Voth, 2012. "(Re-) Shaping hatred: Anti-Semitic attitudes in Germany, 1890-2006," Economics Working Papers 1344, Department of Economics and Business, Universitat Pompeu Fabra.

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