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The long-term costs of government surveillance: Insights from stasi spying in East Germany

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  • Lichter, Andreas
  • Löffler, Max
  • Siegloch, Sebastian

Abstract

We investigate the long-run effects of government surveillance on civic capital and economic performance, studying the case of the Stasi in East Germany. Exploiting regional variation in the number of spies and administrative features of the system, we combine a border discontinuity design with an instrumental variables strategy to estimate the long-term, post-reunification effect of government surveillance. We find that a higher spying density led to persistently lower levels of interpersonal and institutional trust in post-reunification Germany. We also find substantial and long-lasting economic effects of Stasi surveillance, resulting in lower income, higher exposure to unemployment, and lower self-employment.

Suggested Citation

  • Lichter, Andreas & Löffler, Max & Siegloch, Sebastian, 2019. "The long-term costs of government surveillance: Insights from stasi spying in East Germany," ZEW Discussion Papers 19-049, ZEW - Leibniz Centre for European Economic Research.
  • Handle: RePEc:zbw:zewdip:19049
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    10. Berggren, Niclas & Ljunge, Martin & Nilsson, Therese, 2019. "Roots of tolerance among second-generation immigrants," Journal of Institutional Economics, Cambridge University Press, vol. 15(6), pages 999-1016, December.
    11. Goldfayn-Frank, Olga & Wohlfart, Johannes, 2019. "How Do Consumers Adapt to a New Environment in their economic forecasting? Evidence from the German Reunification," VfS Annual Conference 2019 (Leipzig): 30 Years after the Fall of the Berlin Wall - Democracy and Market Economy 203668, Verein für Socialpolitik / German Economic Association.
    12. Christine Laudenbach & Ulrike Malmendier & Alexandra Niessen-Ruenzi, 2020. "The Long-lasting Effects of Living under Communism on Attitudes towards Financial Markets," NBER Working Papers 26818, National Bureau of Economic Research, Inc.
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    More about this item

    Keywords

    civic capital; government surveillance; trust; economic performance; East Germany;
    All these keywords.

    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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