Learning, political attitudes and the crisis in transition countries

We study how the recent economic crisis has reshaped support for democracy and the market economy in 30 transition countries. Political values are cyclical and reflect a learning process. Support for the market and democracy has decreased between 2006 and 2010 in countries that were hit the hardest and that were the furthest along the reform path, and notably new EU members. In contrast, such support has increased in the CIS, driven by the young and unemployed. Although individual exposure to the crisis is associated with lower-than-average support for democracy and markets, it leads these segments of the population, which were most excluded from the political-economic system in place, to demand more liberal reforms in countries with corrupt institutions and lagging reforms. We rely on individual level, within-country variation and on the use of many individual controls to identify the causal effect of the crisis on attitudes.