German division and reunification and the “effects” of Communism

Some caveats from f/c JEP paper with @LukasMergele & Ludger Woessmann @ifo_Education

https://warwick.ac.uk/fac/soc/economics/research/centres/cage/manage/publications/461-2020_becker.pdf

Issue #1: The GDR can be spotted before it even existed. (1/13)

(2/13) Further economic outcomes

(3/13) Political preferences

(4/13) Culture

(5/13) Gender roles

(6/13) These differences show up also in border samples, so geographic RDD is not necessarily a way out.

(7/13) There are further issues: #2: East and West were differentially affected by World War II and the occupying forces:

Sex ratio 1946 lower in East (but not pre-WWII).

Soviet occupation in East:

Higher losses due to dismantling of capital equipment (reparations) in East.

(8/13) Issue #3: selective out-migration 1945-1961

About one-fifth of East Germany’s population migrated West until 1961 (when the Berlin Wall was built).

They are a selective group of migrants and probably not big fans of Communism …

(9/13) #4: (Selective) West-to-East migration

About half a million people went from West to East before 1961.

GDR propaganda: people “not in agreement with capitalist system”.

Six out of 19 Politburo members were born in West, incl. Erich Honecker, GDR leader in 1971-1989.

(10/13) Take-away: German division and reunification is not a straightforward natural experiment. We should be cautious in interpreting the evidence of some (great) papers on the enduring “effects” of living under communism.

(11/13) Interesting avenue for future research: study “endogeneity of political systems” more generally. Regime changes are not random and often trigger selective migration of those who feel most strongly for or against the regime.

(12/13) Bonus graph 1/2: Sad and well-known fact: GDP gap between East and West is very persistent.

(13/13) Bonus graph 2/2: GDR population had fallen behind in terms of life expectancy during second half of GDR. But gap has closed. Good news.