the Habsburg effect

Empires that ruled over long periods of time, sometimes for centuries, might have had enough time to build up formal and informal institutions that have lasted to the present day. In the context of Eastern Europe, the Habsburg Empire is considered to have had better administrative institutions than the Ottoman Empire or the Russian Empire. ….

[To measure the long-run effects of the Habsburg Empire] we … exploit the fact that the former Habsburg border cuts straight through five countries today – Poland, Ukraine, Romania, Serbia, and Montenegro (see Figure 1). …. We can thus restrict the analysis strictly to variation within individual modern-day countries, in order not to capture unobserved country differences. ….

Figure 1. The Habsburg Empire in Eastern Europe and our “Border Sample”  [Click on the chart for a clearer image.]

Our results suggest that the Habsburg Empire is indeed still visible in the cultural norms and interactions of humans with their state institutions today. Comparing individuals left and right of the long-gone Habsburg border, people living in locations that used to be territory of the Habsburg Empire have higher trust in courts and police. These trust differentials also transform into “real” differences in the extent to which bribes have to be paid for these local public services. ….

The specific mechanisms through which the Habsburg effect prevailed remain an open question for future research. The substantial waves of migration and displacement that accompanied the institutional disruptions in the successor states of the Habsburg Empire suggest that the cultural norms of behaviour are unlikely to have survived solely by intergenerational transmission within families. It rather seems that such channels as the persistent nature of continuous reciprocal interactions in local communities, the content of knowledge and behavioural patterns conveyed in schools, and the quality of human capital of bureaucrats and citizens may have also played a role.

Sascha O. Becker and Ludger Woessmann, “How the long-gone Habsburg Empire is still visible in Eastern European bureaucracies today“, VoxEU, 31 May 2011.

The authors of this column are German economists. Becker teaches at the University of Warwick and Woessmann at the University of Munich.

This fascinating study shows the importance of institutions. The Habsburg Effect is statistically significant, even after all the political upheavals these countries have been through. But is the effect important quantitatively? The full study convinced me that it is. Here is a summary of the quantitative results:

Going beyond statistical significance, we can discuss the size of the effects estimated by the ordered logit models by referring to marginal effects. All dependent variables are measured in five categories, with answers on the trust variables ranging from “complete distrust” to “complete trust” and answers on the bribe variables ranging from “never” to “always.” As the detailed results reported in Appendix Table A.2 show, when holding the other variables constant at their means, having been part of the Habsburg Empire increases the probability of moving to a higher category of trust in courts by 2.2 percentage point, on average across the five categories. The average of the absolute value of the percentage change across categories is 1.2 percentage points for trust in the police, 2.3 percentage points for bribes to courts, and 2.9 percentage points for bribes to the road police. Viewed relative to the average share of 20 percent in each of the five categories, Habsburg affiliation thus moves the trust and corruption categories by 6-15 percent on average. This is substantially larger than the average absolute marginal effects of most other variables such as gender, age, being employed, speaking the native language, belonging to an ethnic minority, living in an urban or metropolitan area, and household size, albeit smaller than the average absolute marginal effects of some education levels and of a few of the religious comparisons. Trust and corruption in courts and police are thus affected by former Habsburg affiliation in a quantitatively important way.

Sascha O. Becker, Katrin Boeckh, Christa Hainz and Ludger Woessmann, “The Empire Is Dead, Long Live the Empire! Long-Run Persistence of Trust and Corruption in the Bureaucracy“, IZA Discussion Paper 5584 (March 2011), pp. 18-19.

The full paper – 30 pages of text, plus tables and appendices – has two additional authors. Katrin Boeckh is an historian at The Institute for East European Studies in Munich. Christa Hainz is an economist at the Ifo Institute for Economic Research in Munich. This link is ungated. The one provided at VoxEU requires subscription or payment for downloads.

This research shows the enduring effects of ‘good’ institutions, long after their collapse. What about the effect of ‘bad’ institutions? Will the effect of the communist institutions also persist for generations following their collapse? I suspect that they will, but we will not know with certainty until many decades have passed. East and West Germany is a natural experiment, as is North and South Korea, and – perhaps – Cuba and the Dominican Republic. This is research for historians and economists who are not yet born.

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