The Long-Term Costs of Government Surveillance: Insights from Stasi Spying in East Germany

Andreas Lichter*, Max Löffler*, Sebastian Siegloch*

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

Abstract

We investigate the long-run effects of government surveillance on civic capital and economic performance, studying the case of the Stasi in East Germany. Exploiting regional variation in the number of spies and administrative features of the system, we combine a border discontinuity design with an instrumental variables strategy to estimate the long-term, post-reunification effect of government surveillance. We find that a higher spying density led to persistently lower levels of interpersonal and institutional trust in post-reunification Germany. We also find substantial and long-lasting economic effects of Stasi surveillance, resulting in lower income, higher exposure to unemployment, and lower self-employment.
Original languageEnglish
JournalJournal of the European Economic Association
Early online date21 Apr 2020
DOIs
Publication statusE-pub ahead of print - 21 Apr 2020

JEL classifications

  • h11 - Structure, Scope, and Performance of Government
  • n34 - Economic History: Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy: Europe: 1913-
  • n44 - Economic History: Government, War, Law, International Relations, and Regulation: Europe: 1913-
  • p20 - Socialist Systems and Transitional Economies: General

Keywords

  • government surveillance
  • trust
  • social ties
  • East Germany

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