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The Long-Term Costs of Government Surveillance: Insights from Stasi Spying in East Germany

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  • Andreas Lichter
  • Max Löffler
  • Sebastian Siegloch

Abstract

Despite the prevalence of government surveillance systems around the world, causal evidence on their social and economic consequences is lacking. Using county-level variation in the number of Stasi informers within Socialist East Germany during the 1980s and accounting for potential endogeneity, we show that more intense regional surveillance led to lower levels of trust and reduced social activity in post-reunification Germany. We also find substantial and long-lasting economic effects of Stasi spying, resulting in lower self-employment, higher unemployment and larger out-migration throughout the 1990s and 2000s. We further show that these effects are due to surveillance and not alternative mechanisms. We argue that our findings have important implications for contemporary surveillance systems.

Suggested Citation

  • Andreas Lichter & Max Löffler & Sebastian Siegloch, 2016. "The Long-Term Costs of Government Surveillance: Insights from Stasi Spying in East Germany," SOEPpapers on Multidisciplinary Panel Data Research 865, DIW Berlin, The German Socio-Economic Panel (SOEP).
  • Handle: RePEc:diw:diwsop:diw_sp865
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    9. Christoph Eder & Martin Halla, 2018. "On the Origin of the German East-West Population Gap," Economics working papers 2018-17, Department of Economics, Johannes Kepler University Linz, Austria.
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    More about this item

    Keywords

    government surveillance; trust; social ties; East Germany;

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • N34 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Europe: 1913-
    • N44 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Europe: 1913-
    • P20 - Economic Systems - - Socialist Systems and Transition Economies - - - General

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