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Persistent anti-market culture: A legacy of the Pale of Settlement and of the Holocaust

Listed author(s):
  • Irena Grosfeld

    (PSE - Paris-Jourdan Sciences Economiques - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics)

  • Alexander Rodnyansky

    (CEFIR - Center for Economic and Financial Research - CEFIR)

  • Ekaterina Zhuravskaya

    (PSE - Paris-Jourdan Sciences Economiques - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics, NES - New Economic School - NES)

We investigate the long-term effects of the important presence of Jews in Eastern Europe before the Second World War and their disappearance during the Holocaust. The Pale of Settlement, the area which Jewish residents were confined to in the Russian Empire, is used as a source of exogenous variation in the size of the Jewish population before the Second World War. Based on election and survey data, we find that current residents of the Pale, compared to their counterparts outside the Pale, vote more for socialist anti-market parties, have lower support for market economy and democracy, are less engaged in entrepreneurship, but exhibit higher levels of trust. At the same time, the Pale has no lasting effects on average consumption, income, and education levels. Regression discontinuity at the Pale border helps identification. We show that the effect of the Pale is related to the former presence of Jews rather than the inflow of new migrant population into the formerly-Jewish areas. We suggest a possible mechanism and present evidence consistent with it: non-Jewish population, at the time when two groups lived together side-by-side, developed persistent anti-market culture and bonding trust, rooted in ethnic hatred towards Jews. We show that, consistent with the mechanism, current residents of towns closer to places of pogroms exhibit higher trust and anti-market attitudes even controlling for the historical share of Jews in the population and the Pale.

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Paper provided by HAL in its series PSE Working Papers with number halshs-00564927.

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Date of creation: Oct 2010
Handle: RePEc:hal:psewpa:halshs-00564927
Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00564927v2
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  18. repec:hrv:faseco:30726298 is not listed on IDEAS
  19. Bjornskov, Christian, 2006. "The multiple facets of social capital," European Journal of Political Economy, Elsevier, vol. 22(1), pages 22-40, March.
  20. La Porta, Rafael, et al, 1997. "Trust in Large Organizations," American Economic Review, American Economic Association, vol. 87(2), pages 333-338, May.
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