Mass Privatization, Distributive Politics, and Popular Support for Reform in the Czech Republic
SITE Working Paper No. 121
Posted: 3 Oct 1997
Date Written: August 1997
This paper presents an empirical analysis of the role of privatization policy design in creating a constituency for economic reform, focusing on the case of the Czech Republic in the early 1990s. Drawing on a sample survey of 1459 Czech individuals in January 1996, we construct attitudinal indicators of the respondents' reactions to reforms, their opinions on the roles of the state and the market in the economy, their perceptions of the legitimacy of transition, and their democratic values. Using ordered probit estimation techniques, and controlling for income and a variety of other individual characteristics, we find that receiving property through the extensive Czech program of restitution is strongly associated with higher support for reform, markets, and democracy. Concerning the voucher privatization program, we find that participants tend to be more supportive of reform than non-participants, but most of this effect is accounted for by the stronger support of participants who have retained their shares rather than selling shortly after receiving them. Among workers employed in firms of different ownership types, there is a weak tendency for workers in privatized firms to oppose reforms, but a clear propensity of entrepreneurs to support them. The magnitude of these estimated effects is typically large: our policy simulations show, for example, that the total impact of all these dimensions of the privatization process nearly double the proportion of the population in "strong" opposition to price controls. The results provide evidence for the hypothesis that the particular design of a reform program may have important effects on the attitudes of the citizenry, including their willingness to support reforms and their faith in markets and democracy.
JEL Classification: L33, P21
Suggested Citation: Suggested Citation