The Long-Term Costs of Government Surveillance: Insights from Stasi Spying in East Germany

61 Pages Posted: 3 Oct 2016

See all articles by Andreas Lichter

Andreas Lichter

IZA

Max Loeffler

affiliation not provided to SSRN

Sebastian Siegloch

IZA Institute of Labor Economics; University of Mannheim - Department of Economics; ZEW – Leibniz Centre for European Economic Research - Corporate Taxation and Public Finance Research; CESifo (Center for Economic Studies and Ifo Institute)

Multiple version iconThere are 2 versions of this paper

Date Written: August 16, 2016

Abstract

Despite the prevalence of government surveillance systems around the world, causal evidence on their social and economic consequences is lacking. Using county-level variation in the number of Stasi informers within Socialist East Germany during the 1980s and accounting for potential endogeneity, we show that more intense regional surveillance led to lower levels of trust and reduced social activity in post-reunification Germany. We also find substantial and long-lasting economic effects of Stasi spying, resulting in lower self-employment, higher unemployment and larger out-migration throughout the 1990s and 2000s. We further show that these effects are due to surveillance and not alternative mechanisms. We argue that our findings have important implications for contemporary surveillance systems.

Keywords: government surveillance, trust, social ties, East Germany

JEL Classification: H110, N340, N440, P200

Suggested Citation

Lichter, Andreas and Loeffler, Max and Siegloch, Sebastian, The Long-Term Costs of Government Surveillance: Insights from Stasi Spying in East Germany (August 16, 2016). CESifo Working Paper Series No. 6042. Available at SSRN: https://ssrn.com/abstract=2845286

Andreas Lichter

IZA ( email )

No Address Available

Max Loeffler

affiliation not provided to SSRN

Sebastian Siegloch (Contact Author)

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

University of Mannheim - Department of Economics ( email )

D-68131 Mannheim
Germany

ZEW – Leibniz Centre for European Economic Research - Corporate Taxation and Public Finance Research ( email )

United States

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Register to save articles to
your library

Register

Paper statistics

Downloads
77
Abstract Views
547
rank
168,136
PlumX Metrics