The Empire Is Dead, Long Live the Empire! * Values and Human Interactions 90 Years after the Fall of the Habsburg Empire Sascha O. Becker† U Stirling, Ifo, CESifo and IZA Katrin Boeckh‡ Institute for Eastern European Studies, Regensburg and LMU Munich Christa Hainz Ifo, CESifo and WDI Ludger Woessmann LMU Munich, Ifo, CESifo and IZA Abstract: Formal institutions as well as informal institutions, such as norms and values, influence agents’ behavior. We want to identify whether the Habsburg Empire left an institutional legacy that influences current economic outcomes in Central and Eastern Europe. We use individual-level survey data from the Life in Transition Survey and combine them with municipality-level information on affiliation with the Habsburg Empire. Using a regression-discontinuity design, we show that past affiliation with the Habsburg Empire increases trust in state institutions and investment in social capital. It also reduces the probability that bribes are paid for a variety of public services. Keywords: Institutions; Social Capital; Corruption; Habsburg Empire; Regression-Discontinuity Design JEL classification: D73, N33, N34 This version: August 19, 2009 * We received substantive comments during seminar presentations at the universities of Cambridge, Lancaster, Linz, Munich, Regensburg and Stirling. Discussions with and comments from Ian Walker, Michael Pammer and Rudolf Winter-Ebmer were very fruitful. Erik Hornung, Dominikus Huber, Sebastian Kohls and Elena Petrova provided excellent research assistance. † Division of Economics, Stirling Management School, University of Stirling, Stirling FK9 4LA, United Kingdom;
[email protected] ‡ Institute for Eastern European Studies, History Department, Landshuter Str. 4, 93047 Regensburg, Germany;
[email protected] Ifo Institute for Economic Research, Poschingerstr.