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Conspicuous Consumption and Communism: Evidence from East and West Germany

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  • Tim Friehe

    ()

  • Mario Mechtel

    ()
    (Institute for Labour Law and Industrial Relations in the EU, University of Trier)

Abstract

This paper investigates the influence of the political regime on the relative importance of conspicuous consumption. We use the separation of Germany into the communist GDR and the democratic FRG and its reunification in 1990 as a natural experiment. Relying on household data that are representative for Germany, our empirical results strongly indicate that conspicuous consumption is relatively more important in East Germany. Importantly, a significant gap in conspicuous consumption expenditures remains even 18 years after the reunification.

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Bibliographic Info

Paper provided by Institute of Labour Law and Industrial Relations in the European Union (IAAEU) in its series IAAEU Discussion Papers with number 201203.

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Date of creation: Oct 2012
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Handle: RePEc:iaa:dpaper:201203

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Keywords: conspicuous consumption; status-seeking; relative income; political regime; behavioral economics;

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Cited by:
  1. Mario Mechtel & Tim Friehe, 2014. "Gambling to Leapfrog in Status?," IAAEU Discussion Papers 201404, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).

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