Historical Shocks and Persistence of Economic Activity: Evidence from a Unique Natural Experiment

42 Pages Posted: 14 Jul 2016

See all articles by Michael Fritsch

Michael Fritsch

University of Jena - School of Economics and Business Administration

Alina Sorgner

University of Jena

Michael Wyrwich

University of Jena

Evguenii Zazdravnykh

National Research University Higher School of Economics

Date Written: July 14, 2016

Abstract

This paper investigates the persistence of entrepreneurship in the region of Kaliningrad between 1925 and 2010. During this time period the area experienced a number of extremely disruptive shocks including; devastation caused by World War II, a nearly complete replacement of the native German population by Soviets, and 45 years under an anti-entrepreneurial socialist economic regime followed by a shock-type transition to a market economy. Nevertheless, we find a surprisingly high level of persistence of industry-specific self-employment rates in the districts of the Kaliningrad region. Our analysis suggests that persistence of entrepreneurship is higher in regions with a history of successful entrepreneurship. That is, in regions where a specific industry was particularly efficient and entrepreneurial activity was especially pronounced.

Keywords: Entrepreneurship, regional culture, persistence

JEL Classification: L26, N94, P25, P5

Suggested Citation

Fritsch, Michael and Sorgner, Alina and Wyrwich, Michael and Zazdravnykh, Evguenii, Historical Shocks and Persistence of Economic Activity: Evidence from a Unique Natural Experiment (July 14, 2016). Higher School of Economics Research Paper No. WP BRP 143/EC/2016, Available at SSRN: https://ssrn.com/abstract=2809663 or http://dx.doi.org/10.2139/ssrn.2809663

Michael Fritsch

University of Jena - School of Economics and Business Administration ( email )

Carl-Zeiss-Str. 3
D-07743 Jena
Germany

Alina Sorgner

University of Jena ( email )

Fürstengraben 1
Jena, 07743
Germany

Michael Wyrwich

University of Jena ( email )

Furstengraben 1
Jena, Thuringa 07743
Germany

Evguenii Zazdravnykh (Contact Author)

National Research University Higher School of Economics ( email )

Myasnitskaya street, 20
Moscow, Moscow 119017
Russia

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