Trust We Lost: The Impact of the Treuhand Experience on Political Alienation in East Germany

Kim Leonie Kellermann

No 1175, SOEPpapers on Multidisciplinary Panel Data Research from DIW Berlin, The German Socio-Economic Panel (SOEP)

Abstract: Do politically administered mass layoffs undermine trust and political interest? During the German reunification, formerly state-owned socialist firms in East Germany were privatized by the Treuhand, which came at the cost of massive job losses and public protest. I demonstrate that these activities had a detrimental effect on attitudes and political behavior of the affected individuals. Using survey data from the German Socio-economic Panel and election results, I find that East Germans who lost their jobs exhibit significantly lower trust levels, lower political interest and a lower identification with mainstream democratic parties, even up to 30 years after reunification. I corroborate the causality of the results using fixed-effects estimations and a placebo analysis, which fails to explain political disenchantment by reasons other than the Treuhand experience. I interpret the findings as the persistent, negative effect of perceived political mismanagement during a crucial phase of economic transition on long-run political identification.

Keywords: East Germany; trust; political alienation; privatization; radical voting (search for similar items in EconPapers)
JEL-codes: D72 E24 L33 (search for similar items in EconPapers)
Pages: 42, XX p.
Date: 2022
New Economics Papers: this item is included in nep-cdm, nep-his, nep-lab, nep-pol and nep-soc
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Persistent link: https://EconPapers.repec.org/RePEc:diw:diwsop:diw_sp1175

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