The Economic Costs of Mass Surveillance: Insights from Stasi Spying in East Germany

Andreas Lichter (), Max Löffler and Sebastian Siegloch
Additional contact information
Andreas Lichter: Technical University Dortmund

No 9245, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Based on official records from the former East German Ministry for State Security, we quantify the long-term costs of state surveillance on social capital and economic performance. Using county-level variation in the spy density in the 1980s, we exploit discontinuities at state borders to show that higher levels of Stasi surveillance led to lower levels of social capital as measured by interpersonal and institutional trust in post-reunification Germany. We estimate the economic costs of spying by applying a second identification strategy that accounts for county fixed effects. We find that a higher spy density caused lower self-employment rates, fewer patents per capita, higher unemployment rates and larger population losses throughout the 1990s and 2000s. Overall, our results suggest that the social and economic costs of state surveillance are large and persistent.

Keywords: trust; social capital; surveillance; spying; East Germa (search for similar items in EconPapers)
JEL-codes: H11 N34 N44 P26 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2015-07
New Economics Papers: this item is included in nep-ger, nep-his and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (26)

Published - substantially revised version published in: Journal of the European Economic Association , 2021, 19 (2), 741 - 789

Downloads: (external link)
https://docs.iza.org/dp9245.pdf (application/pdf)

Related works:
Journal Article: The Long-Term Costs of Government Surveillance: Insights from Stasi Spying in East Germany (2021)
Working Paper: The Long-Term Costs of Government Surveillance: Insights from Stasi Spying in East Germany (2019)
Working Paper: The long-term costs of government surveillance: Insights from stasi spying in East Germany (2019)
Working Paper: The Long-Term Costs of Government Surveillance: Insights from Stasi Spying in East Germany (2016)
Working Paper: The Long-Term Costs of Government Surveillance: Insights from Stasi Spying in East Germany (2016)
Working Paper: The Long-Term Costs of Government Surveillance: Insights from Stasi Spying in East Germany (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp9245

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().