The social capital legacy of communism-results from the Berlin Wall experiment

- We empirically investigate the enduring impact of communism on peoples' preferences.
- We establish a direct link between communist history and mobility patterns observed.
- Individuals in post-communist regions are still less invested in open social capital.
- Open social capital increases spatial mobility; closed social capital decreases it.

In this paper we establish a direct link between the communist history, the resulting structure of social capital, and attitudes toward spatial mobility. We argue that the communist regime induced a specific social capital mix that discouraged geographic mobility even after its demise. Theoretically, we integrate two branches of the social capital literature into one more comprehensive framework distinguishing an open type and a closed type of social capital. Using the German Socio-Economic Panel (GSOEP) we take advantage of the natural experiment that separated Germany into two parts after the WWII to identify the causal effect of social capital on mobility. We estimate a three equation ordered probit model and provide strong empirical evidence for our theoretical propositions.