A Different Look at Lenin's Legacy: Trust, Risk, Fairness and Cooperativeness in the Two Germanies

Guido Heineck and Bernd Süssmuth

No 5219, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: What are the long-term effects of Communism on economically relevant notions such as social trust? To answer this question, we use the reunification of Germany as a natural experiment and study the post-reunification trajectory of convergence with regard to individuals’ trust and risk, as well as perceived fairness and cooperativeness. Our hypotheses are derived from a model of German reunification that incorporates individual responses both to incentives and to values inherited from earlier generations as recently suggested in the literature. Using data from the German Socio-Economic Panel, we find that despite twenty years of reunification East Germans are still characterized by a persistent level of social distrust. In comparison to West Germans, they are also less inclined to see others as fair or helpful. Implied trajectories can be interpreted as evidence for the passing of cultural traits across generations and for cooperation being sustained by values rather than by reputation. Moreover, East Germans are found to be more risk loving than West Germans. In contrast to trust and fairness, full convergence in risk attitude is reached in recent years.

Keywords: political regimes; risk attitudes; social trust; German reunification (search for similar items in EconPapers)
JEL-codes: P51 Z31 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2010-09
New Economics Papers: this item is included in nep-cbe, nep-cis and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Published - revised version published in: Journal of Comparative Economics, 2013, 41 (3), 789-803

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Related works:
Working Paper: A Different Look at Lenin's Legacy: Trust, Risk, Fairness and Cooperativeness in the two Germanies (2010)
Working Paper: A Different Look at Lenin's Legacy: Trust, Risk, Fairness and Cooperativeness in the Two Germanies (2010)
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