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  3. American Economic Review
  4. September 2007
  5. Good-bye Lenin (or Not?): The Effect of Communism on People's Preferences

Good-bye Lenin (or Not?): The Effect of Communism on People's Preferences

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Abstract

Preferences for redistribution, as well as the generosity of welfare states, differ significantly across countries. This paper tests whether there exists a feedback process of the economic regime on individual preferences. We exploit the experiment of German separation and reunification to establish exogeneity of the economic system. We find that, after German reunification, East Germans are more in favor of state intervention than West Germans. This effect is especially strong for older cohorts. We further find that East Germans' preferences converge toward those of West Germans. It will take one to two generations for preferences to converge completely. (JEL D12, D72, H11, H23, P26)

Citation

Alesina, Alberto, and Nicola Fuchs-Schündeln. 2007. "Good-bye Lenin (or Not?): The Effect of Communism on People's Preferences." American Economic Review, 97 (4): 1507-1528. DOI: 10.1257/aer.97.4.1507

Additional Materials

JEL Classification

  • P26 Socialist Systems and Transitional Economies: Political Economy; Property Rights
  • P36 Socialist Institutions and Their Transitions: Consumer Economics; Health; Education and Training: Welfare, Income, Wealth, and Poverty