Thirty years after the fall of communism, many assume that the economic transition of Eastern Europe and the former Soviet States towards a system of market economy is complete. But the region faces new challenges, of both economic and political kind, which renders a thorough understanding the past even more important. This policy brief is based on the scientific contributions presented at the 7th SITE Academic Conference held at the Stockholm School of Economics from December 16th to December 17th, 2019. Organized by the Stockholm Institute of Transition Economics (SITE), the conference brought together academics from all over Europe and the United States to share and discuss their research on economic and political development in Eastern Europe.
The Imperial and Soviet Periods
In the first section of the conference, papers with a focus on the long-term history of Eastern Europe and its implications for more recent events were presented. Marvin Suesse presented his research on how the Russian State Bank financed Tsarist Russia´s belated industrialization, a question that had been discussed by historians, but never thoroughly analyzed quantitatively. By geo-coding historical manufacturing censuses around the turn of the century and using distance between bank branches and factory location, the causal impact of the expansion of the State Bank is estimated, revealing large effects on firm revenues and productivity. These effects are largest in areas where alternative means of financing were least available and where human capital was more abundant.
Natalya Naumenko presented her findings on the economic consequences of the 1933 Soviet famine, which in terms of casualties was extremely devastating. She uses the meteorological conditions a year earlier as an instrumental variable and finds that the famine, which was mostly a rural phenomenon, had a persistent negative effect on the urban population while the rural population recovered relatively quickly.
Gerhard Toews discussed the long-term consequences on regional development of the displacement of an estimated 3 million “enemies of the people”, political prisoners typically belonging to the elite of the society, into the gulags in the early years of the Soviet Union. Using archival data, he has constructed a large database describing the gulag population in terms of the shares of “enemies” relative to other prisoners and taking into account their socio-economic characteristics i.e. the much higher levels of education of the former group. Exploiting variation within gulags, the results suggest that a historically higher density of “enemies” means higher economic prosperity today as measured by nightlight intensity.
Taking another angle, Christian Ochsner investigated the effects of the Red Army´s occupation on post-war Europe, using the demarcation line crossing the Austrian state of Styria as a natural experiment. His conclusion is that even the temporary occupation affected the region’s long-term development, the main channel being age-specific migration.
Finally, Andreas Stegman offered an analysis of the effects of the 1972 East German Extended Visitors Program. The program reduced travel restrictions for West German visitors traveling to certain districts of East Germany. Using a geographic regression discontinuity design comparing similar districts with and without the program, he shows that included districts indeed received much more visits from West Germany and that their citizens were more likely to protest against the Communist government and less likely to vote for the ruling party. This suggests that face-to-face interaction can influence beliefs and attitudes in non-democratic regimes, in turn influencing individual behavior and societal outcomes during transition.
Corruption, Conflict and Public Institutions
Another topic of the conference was the current role of corruption, conflict, electoral fraud and public sector effectiveness for the region. Scott Gehlbach presented his most recent research on the ownership patterns and strategies of Ukrainian oligarchs before and after the Orange revolution. By mapping oligarchs to changing political leadership, he shows how firm owners in Ukraine take actions to protect their property depending on their connections with the current government. He finds that obfuscation of ownership behind holding companies and complicated structures is a potentially valuable strategy in this environment in general but becomes particularly important when an oligarch loses direct connections to the ruling regime.
Likewise, Timothy Frye analyzed election subversion by employers in Russia, Argentina, Venezuela, Turkey and Nigeria. He finds that in Russia, public sector employers and especially state-owned firms are more likely to influence their employees’ decision to vote than private companies. Furthermore, work place mobilization by employers in Russia is clearly negatively associated with the freedom of the press. Election subversion is more likely to be successful when the degree of dependence of the employee is high and the employer’s potential threats are credible. Among Russian firm officials, the most frequently named motivations for them to practice election subversion are the desire to improve their relationship with the authority and the intention to help their party.
Michal Myck studied the impact of the transition experience on economic development around the Polish-German border. Polish communities close to the border were economically backward at the beginning of the transition but could potentially benefit from trade opportunities with an opening towards the West. Using similar methods to those of Stegman above, and nightlight intensity as a measure of economic activity as for instance Toews, Myck finds significant evidence for economic convergence both between Germany and Poland, and between Polish border regions and the rest of Poland.
Vasily Korovkin presented his research on the impact of the conflict in Eastern Ukraine on trade in non-conflict areas in Ukraine, hypothesizing that the conflict may cause a trade diversion away from Russia, particularly so in areas with many ethnic Ukrainians. Using variation in the share of the Russian speaking population at the county level as well as detailed firm level export and import data, he finds that the decrease in trade with Russia is negatively correlated with the share of the Russian speaking population. Potential mechanisms include a decline in trust at the firm level and changes in local attitudes including consumer boycotts.
Finally, Tetyana Tyshchuk analyzed the effects of a Ukrainian public sector reform on civil servants’ capacity and autonomy. The reform created public policy directorates parallel to the regular bureaucracy in 10 ministries. Members of the directorates were hired based on a different procedure and different merits relative to regular public servants and received significantly higher salaries. Tyshchuk finds that the better paid civil servants indeed score higher on many, though not all, indicators of capacity and autonomy.
Information, Populism and Authoritarianism Today
The final important theme of the conference was the role of information and media, old and new, in today’s politics. In the event´s first keynote speech, Ruben Enikolopov analyzed the political effects of the Internet and social media whose low entry barriers and reliance on user-generated content make them decisively different from traditional media channels. On the one hand, this represents a chance for opposition leaders and whistleblowers to make their voice heard and may improve government accountability. On the other, these media may also become a platform for extremists. Enikolopov presented some of his work analyzing to what extent social media has contributed to fighting corruption in Russia. Using the timings of blog posts by the famous Russian opposition leader Alexei Navalny on corporate governance violations in state-owned companies, he shows that revelations resulted in an immediate drop in the price of the traded shares of the respective companies. He also finds evidence suggesting that Navalny´s blog posts resulted in management changes in these companies. In related papers, he exploits the spread of VKontakte (VK), the Russian version of Facebook, to better understand the influence of social networks on political activism, voting and the occurrence of hate crime. He finds that the spread of VK is indeed causally related to political protests, though not because it nurtures opposition to the government, but rather because it facilitates protest co-ordination. With respect to hate crime, he finds that social media only has an effect in areas where it falls on fertile grounds and where there already are high levels of nationalism. The tentative conclusion is that in Russia – as in Western countries – social media seems to have increased political polarization.
On a similar topic but taking a more theoretical approach, Galina Zudenkova investigated the link between information and communication technologies (ICT), regime contestation and censorship. In a game theoretical framework, where citizens use ICT both to learn about the competency of the government and to coordinate protests, governments can use different tools to censor information to increase their chances of survival. Zudenkova finds that less competent regimes are more likely to censor coordination, whereas intermediate regimes are more likely to focus on censoring content. These theoretical predictions are then tested using country level data.
The targeted use of information has also played a key role in Putin’s Russia according to Daniel Treisman. In his keynote speech, he argued that while the 20th century dictatorships were mainly based on violence and ideology, the 21st century has been characterized by a sizeable shift towards what he calls “informational autocracy”. Constructing a dataset on the methods used by authoritarian regimes to maintain power between 1946 and 2015, he shows that the use of torture and violence peaked among those dictators who took power in the 1980s and has declined since. Furthermore, he highlights a remarkable shift from topics of violence towards topics of economic competency in dictators’ speeches. However, Treisman finds that by instrumentalizing information, dictators fool the public “but not the elite”. In democratic regimes, those with tertiary education tend to rate their political leaders higher than people without tertiary education. In the new informational authoritarian regime, the opposite seems to be the case. According to Treisman, this is because the “informed elite” has a better understanding of the political reality in places where the media is censored, Putin’s Russia being a good example. Treisman concluded that this new model of authoritarianism has become the prevalent model outside of Europe and today also has its advocates inside the European Union.
The conference ended with a final keynote speech by Sergei Guriev on the political economy of populism. Using existing definitions, he first confirmed that Europe has seen a rise in right-wing populism in the last 20 years. Secular trends, such as globalization and new communication technology, but also the recent global financial crisis, are driving factors behind the rise of populist parties. For instance, analyzing regional variation in voting patterns suggests that the Brexit vote was primarily driven by economic motives rather than by anti-immigrant sentiments. Ironically, though, most evidence suggests that populist governments have a below-average economic performance once in office, the US and Poland being notable exceptions. A key point of Guriev’s presentation was that populism seems to be a good method to obtain power, but, once in power, populists tend to be less successful in promoting citizen welfare. These findings seem to be of high importance given the increasing public support for populist parties around the world and in parts of Eastern Europe
The conference was very well received and on behalf of SITE, the authors would like to express their appreciation to all speakers and participants for sharing their knowledge and to Riksbankens Jubileumsfond for financial support. For those interested to learn more about the papers summarized very briefly above, please visit the conference website and the presenters’ websites as indicated in the text and here below.
Speakers at the Conference
Andreas Stegman, briq – Institute on Behavior and Inequality
Christian Ochsner, CERGE-EI and University of Zurich
Daniel Treisman, University of California, Los Angeles
Galina Zudenkova, TU Dortmund University
Gerhard Toews, New Economic School Moscow
Marvin Suesse, Trinity College
Michal Myck, CenEA
Natalya Naumenko, George Mason University
Ruben Enikolopov, New Economic School Moscow
Scott Gehlbach, University of Chicago
Sergei Guriev, Sciences Po Paris
Tetyana Tyshchuk, Kyiv School of Economics
Timothy Frye, Columbia University
Vasily Korovkin, CERGE-EI
Gender inequality goes beyond discrimination and sexism. It is also a matter of efficiency and development, and therefore, the socioeconomic losses that result from such inequality must be acknowledged and tackled. This policy brief summarizes the presentations held during the 6th SITE Academic Conference at the Stockholm School of Economics on December 17-18 2018. The event brought together scholars from around the world to examine existing forms of gender inequality, its causes, consequences, and policy interventions through a series of keynote speeches, research presentations and panel discussions.
Gender and survival
The reality of gender inequality is diverse throughout the world. The extent to which women and men face different opportunities and reach different outcomes vary substantially across countries and regions, and the forms of inequality that women face also vary geographically.
While richer countries have mostly closed their gender gaps in health and education, in other parts of the globe women are still struggling to survive, to make their marriage and reproductive choices freely, and to achieve the same educational opportunities as men. This is exactly where modern economic research can facilitate the understanding of the roots of such inequalities in each society, as well as the most likely drivers of change.
Corno, Hildebrandt and Voena (2017) show that in Sub-Saharan Africa and India, the age of marriage is a result of short-term changes in economic conditions (such as a reduction in crop yields due to droughts). Therefore, through for instance insurance mechanisms and temporary transfers, economic policy can influence marriage markets and the age of marriage. Relatedly, according to Ashraf, Bau, Nunn and Voena (2018), a girl in Indonesia or Zambia has a higher probability of being educated if she belongs to a group practicing bride price, defined as the “price” paid by a groom or his family to the bride’s family. This means that marriage markets could be a driver of educational investment. Cousin marriage is another issue within this context. Edlund (2018) suggests that this system serves as a barrier for economic growth by favoring men over women, the old over the young, and the collective over the individual. In general, challenging these marriage systems and improving female economic opportunities require a deeper understanding of the economic role of traditional cultural norms and institutions.
Some groups of women struggle for survival even in the so called “developed world”, being victims of gender violence. Sex workers in the United States are a particularly vulnerable population in this matter. Cunningham, DeAngelo and Tripp (2017) point out that, given that prostitution in most cities of the US isn’t only illegal, but also very dangerous (recording the highest homicide rate of any female occupation), it is critical to improve sex workers’ safety. Craigslist Erotic Services (CES) seemed to have contributed to it, by reducing female homicide rates by 17.4%. Apparently, this was a result of street prostitutes moving indoors and being able to filter clients to be safer. It is, therefore, suggested that the closure of such a platform put sex workers in an even more vulnerable position. Similarly, when it comes to adult entertainment establishments and its relation to sex crimes, Ciacci and Sviatschi (2018) argue that this type of businesses helps decrease daily sex crimes between 7-13% in the precinct where they are located.
When discussing approaches to prostitution, the “Nordic Model” has been highly praised and adopted by several countries. The term refers to a reform initiated in Sweden that considers buying sex a criminal offense, while decriminalizing those who are prostituted. However, preliminary results from Perrotta Berlin, Spagnolo, Immordino and Russo (2018) suggest that intimate partner violence and violence against women might have increased because of its enactment in Sweden.
Gender violence, however, isn’t only domestic or affecting sex workers. Borker (2018) claims that, in India, female college students are willing to choose less prestigious universities, to make additional expenses and to spend more time on transportation than their male counterparts only to avoid harassment on the street or public transportation. Street harassment, therefore, perpetuates gender inequality in both education and potentially the labor market.
Challenging social norms
As already seen, even the most gender-equal countries still suffer from persistent forms of inequality that need to be acknowledged and tackled. Doing so will result both in fairer societies and in more efficient economies, because it will make full use of both halves of the world’s skills and knowledge.
Friebel, Auriol and Wilhelm (2018) state that, in Europe, it is harder for women to make a career in economics. The representation of women in academics is low, and the higher ranked the university, the lower is the representation. This could be a consequence of several issues, one of them being the “glass ceiling”.
The glass ceiling, according to Bertrand (2017), is the phenomenon by which women remain underrepresented in high-level occupations, and earn less. Even in countries such as Denmark and Sweden, women still receive less for the same jobs. There are many potential explanations for this. One of them refers to the gender differences in psychological attributes in work, such as the idea of women performing worse under pressure or being unwilling to compete. This interpretation ultimately falls under the nature vs nurture discussion and only accounts for up to 10% of the pay gap. Another reason states that women suffer the penalties associated with demanding more flexibility. Such demand comes from the need to perform non-market work, like domestic work and, especially, caring for children. This means that women, especially the more educated ones, are paying a disproportionate price in the labor market for raising a couple’s children. Giving women more flexibility won’t crack the glass ceiling, au contraire, it will backfire because flexibility is negatively priced in the market. Besides, it doesn’t address the earning gaps. A more compelling proposal is to shift the focus from increasing flexibility to changing social norms and gender role attitudes. Normalizing and encouraging paternal child care in workplaces, for example, could be a way to do so.
Social norms based on traditional gender stereotypes also seem to be the reason why in Sweden, promotions to top jobs dramatically increase women’s probability of divorce but do not affect men’s marriages, as reported by Folke and Rickne (2018). In this case, promoting norms and policies with a more gender-equal approach to couple formation could increase the share of women in top jobs.
Given the importance of social norms, understanding how they can change is crucial. In Saudi Arabia, two studies were conducted on the influence of misperceived social norms. Both showed that the low-cost intervention of simply providing information could make a big difference. In one case, Bursztyn, González and Yanagizawa-Drott (2018) have evidenced that most young married men privately support female labor force participation (FLFP) outside of home. Nevertheless, they tend to underestimate the level of support for FLFP by other men. When correcting those misperceptions, the men’s willingness to let their wives join the labor force increases. Comparably, Ganguli and Zafar (2018) have shown that there is an increased likelihood of working full-time for female students when they, along with their close circles, receive information about the labor market and the aspirations of other women peers.
Challenging social norms isn’t only beneficial when discussing the glass ceiling and FLFP, it also has the potential to improve public health. In fact, Milazzo (2018) argues that women’s increased mortality rate in India can be an unintended consequence of son preference. Son preference induces women with a first-born daughter to adopt behaviors that increase the risk of maternal morbidity and mortality. Therefore, interventions to change deeply rooted social norms such as the boy preference could significantly reduce maternal mortality risk.
Bridging research and policy
In Malawi, research by Perrotta Berlin, Bonnier and Olofsgård (2017) on aid project location suggests that proximity to aid has a positive effect on the lives of women and children. Likewise, Goldstein (2018) reports that the World Bank’s Empowerment and Livelihoods for Adolescents (ELA) program in Uganda has also led to positive reproductive outcomes and income effects. These results illustrate the importance of reducing the divide between research and policy. Research has the potential of serving as an instrument for informed policy-making and aid intervention.
The Organization for Economic Cooperation and Development (OECD), for instance, applies research to create tools that help improve economic and social well-being. Two of those tools are the Social Institutions and Gender Index (SIGI) and the Development Assistance Committee (DAC) Gender Equality Policy Markers. On one hand, Missika (2018) explains that the SIGI is a cross-country measure of discriminatory social institutions against women and girls. Though the progress is slow (it might take around 200 years to close the gender gaps), its use gradually promotes the creation of locally designed solutions that, combined with adequate legislation, could enhance gender equality. On the other hand, Williams (2018) states that the DAC Gender Equality Policy Markers are meant to ensure that women have access to and benefit from finance.
Consistently , for the Swedish International Development Agency (SIDA), which works on behalf of the Swedish government, gender equality is a priority that permeates its interventions. In this context, the Feminist Foreign Policy has strengthened Sweden’s commitment in the topic.
Prior to finalizing the conference, representatives of the FROGEE Network (Forum for Research on Gender Economics in Eastern Europe and Emerging Economies) made a short presentation about the key challenges for achieving gender equality in their countries and the research opportunities available.
Conference material, including presentations, can be found here.
Speakers at the conference
Marianne Bertrand, University of Chicago
Alessandra Voena, University of Chicago
Alessandra González, University of Chicago
Anders Olofsgård, SITE
Annamaria Milazzo, World Bank
Bathylle Missika, OECD Development Centre
Eva Johansson, SIDA
Girija Borker, World Bank
Guido Friebel, Goethe University Frankfurt
Ina Ganguli, University of Massachusetts
Amherst Johanna Rickne, Stockholm University
Lena Edlund, Columbia University
Lisa Williams-Katz, OECD
Maria Perrotta Berlin, SITE
Markus Goldstein, World Bank
Michal Myck, CenEA
Riccardo Ciacci, The University Loyola Andalucía
Scott Cunningham, Baylor University
- Ashraf, Nava; Natalie Bau, Nathan Nunn, and Alessandra Voena. 2018. “Bride Price and Female Education”. The National Bureau of Economic Research Working Paper No. 22417.
- Bertrand, Marianne. 2017. “The Glass Ceiling”. Becker Friedman Institute for Research in Economics Working Paper No. 2018-38.
- Borker, Girija. 2018. “Safety First: Perceived Risk of Street Harassment and Educational Choices of Women”. Job market paper.
- Bursztyn, Leonardo; Alessandra González, and David Yanagizawa-Drott. 2018. “Misperceived Social Norms: Female Labor Force Participation in Saudi Arabia”.
- Ciacci, Riccardo; and Maria Micaela Sviatschi. 2018. “The Effect of Adult Entertainment Establishments on Sex Crime: Evidence from New York City”.
- Corno, Lucia; Nicole Hildebrandt, and Alessandra Voena. 2017. “Age of Marriage, Weather Shocks, and the Direction of Marriage Payments”. The National Bureau of Economic Research Working Paper No. 23604.
- Cunningham, Scott; Gregory DeAngelo, and John Tripp. 2017. “Craigslist’s Effect on Violence Against Women”.
- Edlund, Lena. 2018. “Cousin Marriage Is Not Choice: Muslim Marriage and Underdevelopment”. American Economic Association Papers and Proceedings, Volume 108, pages 353- 57.
- Folke, Olle; and Johanna Rickne. 2018. “All the Single Ladies: Job Promotions and the Durability of Marriage”.
- Friebel, Guido; Emmanuelle Auriol, and Sascha Wilhelm. 2018. “Women in Europen Economics”. [Mimeo]
- Ganguli, Ina; and Basit Zafar. 2018. “Information and Social Norms: Experimental Evidence on Labor Market Aspirations of Saudi Women”. [Mimeo]
- Goldstein, Markus. 2018. “Evidence on adolescent empowerment programs from four countries”. [Mimeo]
- Milazzo, Annamaria. 2018. “Why are adult women missing? Son preference and maternal survival in India”. Journal of Development Economics, Volume 134, pages 467-484.
- Missika, Bathylle. 2018. “Are laws and social norms still an obstacle to gender equality? Lessons from the SIGI 2019”. [Mimeo]
- Perrotta Berlin, Maria; Evelina Bonnier, and Anders Olofsgård. 2017. “The donor footprint and gender gaps”. WIDER Working Paper 2017/130, United Nations University World Institute for Development Economics Research.
- Perrotta Berlin, Maria; Giancarlo Spagnolo, Giovanni Immordino, and Francesco Flaviano Russo. 2018. “Prostitution and Violence: Empirical Evidence from Sweden”. [Mimeo]
- Williams, Lisa E. 2018. “Financing for gender equality beyong ODA”. [Mimeo]
Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.