Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/265518 
Year of Publication: 
2022
Series/Report no.: 
SOEPpapers on Multidisciplinary Panel Data Research No. 1175
Publisher: 
Deutsches Institut für Wirtschaftsforschung (DIW), Berlin
Abstract: 
Do politically administered mass layoffs undermine trust and political interest? During the German reunification, formerly state-owned socialist firms in East Germany were privatized by the Treuhand, which came at the cost of massive job losses and public protest. I demonstrate that these activities had a detrimental effect on attitudes and political behavior of the affected individuals. Using survey data from the German Socio-economic Panel and election results, I find that East Germans who lost their jobs exhibit significantly lower trust levels, lower political interest and a lower identification with mainstream democratic parties, even up to 30 years after reunification. I corroborate the causality of the results using fixed-effects estimations and a placebo analysis, which fails to explain political disenchantment by reasons other than the Treuhand experience. I interpret the findings as the persistent, negative effect of perceived political mismanagement during a crucial phase of economic transition on long-run political identification.
Subjects: 
East Germany
trust
political alienation
privatization
radical voting
JEL: 
D72
E24
L33
Document Type: 
Working Paper

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