- | Thursday, May 12
- 12:15 PM
- Kaiserplatz 7-9, 4th floor, Room 4.006
The Long-Term Costs of Government Surveillance: Insights from Stasi Spying in East Germany
with Andreas Lichter and Max Löffler
Based on official records from the former East German Ministry for State Security, we quantify the long-term costs of state surveillance on trust, social ties and economic performance. Using county-level variation in the number of informers in the 1980s, we exploit discontinuities at state borders to show that higher levels of government surveillance led to lower levels of trust and a reduction in social interactions in post-reunification Germany. Based on a second, complementary identification strategy that accounts for county fixed effects, we further estimate the economic costs of spying. We find that more intense surveillance caused lower self-employment rates, fewer patents per capita, higher unemployment rates and larger out-migration throughout the 1990s and 2000s. We provide evidence that our effects are directly driven by government surveillance and not due to alternative mechanisms. Overall, our results suggest that the social and economic costs of East German state surveillance are large and persistent.