Citizens in Eastern Europe are less satisfied with life than their peers in other countries. This happiness gap has persisted over time, despite predictions to the contrary by earlier scholars. It holds after controlling for a variety of covariates, such as the standard of living, life expectancy and Eastern Orthodox religion. Armed with a battery of surveys from the early 1990s to 2014, we argue that the happiness gap is explained by how citizens in post-communist countries perceive their governments. Eastern Europeans link their life satisfaction to higher perceived corruption and weaker government performance. Our results suggest that the transition from central planning is still incomplete, at least in the psychology of people.
Using the 2010 Life in Transition Survey, we show that localities with higher religious diversity have more respondents who have tried to set up a business. Although religious diversity also correlates with a higher start-up probability (following trial), this effect is driven by access to finance and risk preferences. We provide suggestive evidence that the positive association between religious diversity and entrepreneurial trial is positively moderated by social capital (when measured as access to weak ties and the ability to bridge structural holes). Our results suggest that programs which encourage entrepreneurial attempts in diverse areas and develop such social capital are likely to be particularly effective. At the start-up stage, relaxing credit constraints should rank high on the policy agenda. JEL codes: J15; L26; P23
In this article a new explanation for the emergence of democratic institutions is proposed: elites may extend the right to vote to the masses in order to attract migrant workers. It is argued that representative assemblies serve as a commitment device for any promises made to labourers by those in power, and the argument is tested on a new political and economic dataset from the thirteen British American colonies. The results suggest that colonies that relied on white migrant labour, rather than slaves, had better representative institutions. These findings are not driven by alternative factors identified in the literature, such as inequality or initial conditions, and survive a battery of validity checks.
We show that unexpected financial windfalls increase corruption in local government. Our analysis uses a new data set on flood-related transfers, and the associated spending infringements, which the Bulgarian central government distributed to municipalities following torrential rains in 2004 and 2005. Using information from the publicly available audit reports we are able to build a unique objective index of corruption. We exploit the quasi-random nature of the rainfall shock (conditional on controls for ground flood risk) to isolate exogenous variation in the amount of funds received by each municipality. Our results imply that a 10 % increase in the per capita amount of disbursed funds leads to a 9.8% increase in corruption. We also present suggestive evidence that more corrupt mayors anticipated punishment by voters and dropped out of the next election race. Our results highlight the governance pitfalls of non-tax transfers, such as disaster relief or assistance from international organizations, even in moderately strong democracies.
We analyse responses to two similar life satisfaction questions asked at different points in the same wave of a major cross-country household survey covering the transition region, Turkey and five Western European countries. We show that while the answers to the two questions are broadly consistent for most people, the responses for some groups differ significantly. Respondents of a lower socio-economic status and with a more favourable parental background show systematically higher levels of selfreported satisfaction in the later question. We also find evidence that responses to the later question are influenced by preceding questions on social capital. Our results have important implications for the design and length of household surveys that contain subjective questions.
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