Mass Privatization, Distributive Politics, and Popular Support for Reform in the Czech Republic

SITE Working Paper No. 121

Posted: 3 Oct 1997

See all articles by John S. Earle

John S. Earle

George Mason University - Schar School of Policy and Government; IZA Institute of Labor Economics

Scott Gehlbach

University of Wisconsin-Madison

Zuzana Sakova

Newark College of Arts & Sciences - Department of Economics

Jiri Vecernik

Academy of Sciences of the Czech Republic - Institute of Sociology

Date Written: August 1997

Abstract

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

Earle, John S. and Gehlbach, Scott and Sakova, Zuzana and Vecernik, Jiri, Mass Privatization, Distributive Politics, and Popular Support for Reform in the Czech Republic (August 1997). SITE Working Paper No. 121. Available at SSRN: https://ssrn.com/abstract=32787

John S. Earle (Contact Author)

George Mason University - Schar School of Policy and Government ( email )

3351 Fairfax Drive
MS 3B1
Arlington, VA 22201
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703-993-8023 (Phone)

HOME PAGE: http://earle.gmu.edu

IZA Institute of Labor Economics

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

Scott Gehlbach

University of Wisconsin-Madison ( email )

1050 Bascom Mall
Madison, WI 53706
United States
608-263-2391 (Phone)

Zuzana Sakova

Newark College of Arts & Sciences - Department of Economics ( email )

360 ML King Jr. Blvd.
Newark, NJ 07102
United States

Jiri Vecernik

Academy of Sciences of the Czech Republic - Institute of Sociology ( email )

Jilska 1
Praha 1
Czech Republic

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