Are the Supporters of Socialism the Losers of Capitalism? Conformism in East Germany and Transition Success

37 Pages Posted: 10 Nov 2021

See all articles by Max Deter

Max Deter

Bergische Universitat Wuppertal - BUW - Schumpeter School of Business and Economics

Martin Lange

ZEW – Leibniz Centre for European Economic Research

Multiple version iconThere are 3 versions of this paper

Date Written: November 9, 2021

Abstract

The empirical literature is inconclusive about whether a country's democratization goes
hand in hand with a reallocation of economic resources. With newly available individual-level
data of former residents of the socialist German Democratic Republic (GDR), we analyze
how supporters and opponents of the socialist system performed within the market-based
democracy of West Germany after reuni cation. Protesters, those who helped to overthrow
the socialist regime in the Peaceful Revolution show higher life satisfaction and better labor
market outcomes in the new economic system. Former members of the ruling socialist party
and employees in state-supervised sectors become substantially less satis ed. These results
do not seem to be driven by individual reactions to the transition, but rather by the removal
of discriminatory practices in the GDR. Additional results indicate that conformism in the
GDR also explains political preferences over the almost three decades after the reuni cation
of Germany.

Keywords: East Germany, state socialism, transition, labor market, life satisfaction

JEL Classification: H10, N44, P20, D31

Suggested Citation

Deter, Max and Lange, Martin, Are the Supporters of Socialism the Losers of Capitalism? Conformism in East Germany and Transition Success (November 9, 2021). Available at SSRN: https://ssrn.com/abstract=3960094 or http://dx.doi.org/10.2139/ssrn.3960094

Max Deter (Contact Author)

Bergische Universitat Wuppertal - BUW - Schumpeter School of Business and Economics ( email )

Gaußstraße 20
Wuppertal, 42119
Germany

Martin Lange

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

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