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Are the Supporters of Socialism the Losers of Capitalism? Conformism in East Germany and Transition Success

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  • Max Deter
  • Martin Lange

Abstract

The empirical literature is inconclusive about whether a country’s democratization goes hand in hand with a reallocation of economic resources. With newly available individual-level data of former residents of the socialist German Democratic Republic (GDR), we analyse how supporters and opponents of the socialist system performed within the market-based democracy of West Germany after reunification. Protesters, those who helped to overthrow the socialist regime in the Peaceful Revolution show higher life satisfaction and better labor market outcomes in the new economic system. Former members of the ruling socialist party and employees in state-supervised sectors become substantially less satisfied. These results do not seem to be driven by individual reactions to the transition, but rather by the removal of discriminatory practices in the GDR. Additional results indicate that conformism in the GDR also explains political preferences over the almost three decades after the reunification of Germany.

Suggested Citation

  • Max Deter & Martin Lange, 2021. "Are the Supporters of Socialism the Losers of Capitalism? Conformism in East Germany and Transition Success," CESifo Working Paper Series 9492, CESifo.
    • Handle: RePEc:ces:ceswps:_9492
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    1. Nikolova, Milena & Popova, Olga, 2023. "Echoes of the Past: The Enduring Impact of Communism on Contemporary Freedom of Speech Values," IZA Discussion Papers 16657, Institute of Labor Economics (IZA).
    2. Sorgner, Alina & Wyrwich, Michael, 2022. "Calling Baumol: What telephones can tell us about the allocation of entrepreneurial talent in the face of radical institutional changes," Journal of Business Venturing, Elsevier, vol. 37(5).
    3. Bondar Mariia & Fuchs-Schündeln Nicola, 2023. "Good Bye Lenin Revisited: East-West Preferences Three Decades after German Reunification," German Economic Review, De Gruyter, vol. 24(1), pages 97-119, February.
    4. Vladimir Otrachshenko & Milena Nikolova & Olga Popova, 2023. "Double-edged sword: persistent effects of Communist regime affiliations on well-being and preferences," Journal of Population Economics, Springer;European Society for Population Economics, vol. 36(3), pages 1139-1185, July.

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    More about this item

    Keywords

    East Germany; state socialism; transition; labor market; life satisfaction;
    All these keywords.

    JEL classification:

    • H10 - Public Economics - - Structure and Scope of Government - - - General
    • N44 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Europe: 1913-
    • P20 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - General
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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