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A different look at Lenin's legacy: Social capital and risk taking in the two Germanies

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  • Heineck, Guido
  • Süssmuth, Bernd

Abstract

What are the long-term effects of Communism on economically relevant notions such as social trust, fairness, and scope of cooperation? To answer this question, we study the post-unification trajectory of convergence between East and West German individuals with regard to trust, cooperation, and risk. Our hypotheses are derived from a model of German unification that incorporates individual responses both to incentives and to values inherited from earlier generations as recently suggested in the literature. Using two waves of balanced panel data, we find that despite twenty years of unification East Germans are still characterized by a persistent level of social distrust. In comparison to West Germans, they are less inclined to see others as cooperative. East Germans are also found to have been more risk loving than West Germans. However, risk attitudes fully converged recently.

Suggested Citation

  • Heineck, Guido & Süssmuth, Bernd, 2012. "A different look at Lenin's legacy: Social capital and risk taking in the two Germanies," Working Papers 118, University of Leipzig, Faculty of Economics and Management Science.
  • Handle: RePEc:zbw:leiwps:118
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    More about this item

    Keywords

    Social trust; Risk Attitudes; Political Regimes; German Unification;
    All these keywords.

    JEL classification:

    • P51 - Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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