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


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


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.

Suggested Citation

  • Bauernschuster, Stefan & Falck, Oliver & Gold, Robert & Heblich, Stephan, 2012. "The shadows of the socialist past: Lack of self-reliance hinders entrepreneurship," European Journal of Political Economy, Elsevier, vol. 28(4), pages 485-497.
  • Handle: RePEc:eee:poleco:v:28:y:2012:i:4:p:485-497
    DOI: 10.1016/j.ejpoleco.2012.05.008

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    References listed on IDEAS

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    Cited by:

    1. Tina Haußen, 2014. "Yours, mine & ours - The role of gender and (equivalence) income in preferences for redistribution and public spending," Jena Economic Research Papers 2014-033, Friedrich-Schiller-University Jena.
    2. 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..
    3. Necker, Sarah & Voskort, Andrea, 2014. "Politics and parents — Intergenerational transmission of values after a regime shift," European Journal of Political Economy, Elsevier, vol. 36(C), pages 177-194.
    4. Björn Kauder & Niklas Potrafke, 2013. "Government Ideology and Tuition Fee Policy: Evidence from the German States," CESifo Economic Studies, CESifo, vol. 59(4), pages 628-649, December.
    5. Boenisch, Peter & Schneider, Lutz, 2013. "The social capital legacy of communism-results from the Berlin Wall experiment," European Journal of Political Economy, Elsevier, vol. 32(C), pages 391-411.
    6. Kandogan, Yener & Johnson, Scott D., 2016. "Role of economic and political freedom in the emergence of global middle class," International Business Review, Elsevier, vol. 25(3), pages 711-725.
    7. Thomas P. Triebs & Justin Tumlinson, 2013. "Learning Capitalism the Hard Way--Evidence from German Reunification," NBER Working Papers 19209, National Bureau of Economic Research, Inc.
    8. Oliver Falck & Robert Gold & Stephan Heblich, 2017. "Lifting the iron curtain: school-age education and entrepreneurial intentions," Journal of Economic Geography, Oxford University Press, vol. 17(5), pages 1111-1148.
    9. Viktor Slavtchev & Michael Wyrwich, 2017. "TV and Entrepreneurship," Jena Economic Research Papers 2017-007, Friedrich-Schiller-University Jena.
    10. Tim Friehe & Markus Pannenberg & Michael Wedow, 2015. "Let Bygones Be Bygones? Socialist Regimes and Personalities in Germany," SOEPpapers on Multidisciplinary Panel Data Research 776, DIW Berlin, The German Socio-Economic Panel (SOEP).
    11. Kyriacou, Andreas P., 2016. "Individualism–collectivism, governance and economic development," European Journal of Political Economy, Elsevier, vol. 42(C), pages 91-104.
    12. Michael Wyrwich & Michael Stuetzer & Rolf Sternberg, 2016. "Entrepreneurial role models, fear of failure, and institutional approval of entrepreneurship: a tale of two regions," Small Business Economics, Springer, vol. 46(3), pages 467-492, March.
    13. Pannenberg, Markus & Friehe, Tim & Wedow, Michael, 2015. "Let Bygones be Bygones? Political Regimes and Personalities in Germany," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112841, Verein für Socialpolitik / German Economic Association.
    14. Facchini, François & Melki, Mickaël, 2013. "Efficient government size: France in the 20th century," European Journal of Political Economy, Elsevier, vol. 31(C), pages 1-14.
    15. repec:liu:liucej:v:14:y:2017:i:2:p:265-301 is not listed on IDEAS

    More about this item


    Self-reliance; Entrepreneurship; Socialism; Capitalism;

    JEL classification:

    • L29 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Other
    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
    • P39 - Economic Systems - - Socialist Institutions and Their Transitions - - - Other


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