The Empire is Dead, Long Live the Empire! Long‐Run Persistence of Trust and Corruption in the Bureaucracy

Abstract

Katrin Boeckh (OEI Regensburg and U Munich)Christa Hainz (Ifo, CESifo, and WDI) Ludger Woessmann (U Munich, Ifo, CESifo, and IZA) Do empires affect attitudes towards the state long after their demise? We hypothesize that the Habsburg Empire with its localized and well-respected administration increased citizens' trust in local public services. In several Eastern European countries, communities on both sides of the long-gone Habsburg border have been sharing common formal institutions for a century now. Identifying from individuals living within a restricted band around the former border, we find that historical Habsburg affiliation increases current trust and reduces corruption in courts and police. Falsification tests of spuriously moved borders, geographic and pre-existing differences, and interpersonal trust corroborate a genuine Habsburg effect.

Does emigration reduce corruption?

“…The models explaining attitudes to corruption are estimated with OLS. We first report conditional correlations, i.e., the results of the models that do not 12 Importantly, the inclusion of the country/region dummies automatically controls for having a historical connection to the Austro-Hungarian empire (Croatia, Bosnia and Herzegovina and Vojvodina once were part of the empire), which might be driving both present-day corruption (Becker et al 2016) and migrationthrough a particularly favorable emigration regime that citizens of the Austro-Hungarian empire enjoyed at the turn of the 20th century relative to people in other parts of Yugoslavia. 13 Recall that our data come from two repeated cross-sectional surveys conducted in 2010 and 2011.…”

Regional Growth and Regional Decline

“…This is most evident from equations (19) and (20) once we realize that market access can be seen as a spatial lag of regional expenditure levels adjusted for price differences (E j P σ−1 j ), where the T 1−σ ij are the elements of the spatial weight matrix. 34 One approach has been to search for instrumental variables, but the exclusion restrictions are often questionable, and the scope for finding a time-varying instrument is limited. A more promising approach is to study quasi-natural experiments in which there is exogenous variation in market access.…”

Communism as the unhappy coming

“…A broader literature studies the impact of long-run historical factors on cultural preferences (Becker et al 2014;Nunn and Wantchekon 2011). Moreover, recent work has argued that culture is an important determinant of economic and political development (Gorodnichenko and Roland 2015;Tabellini 2010).…”