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TRUST IN KEY LOCAL INSTITUTIONS: How the long-gone Habsburg Empire is still visible in East European bureaucracies today

People and organisations in what used to be the Habsburg Empire have higher trust in courts and police than their counterparts just outside those long-gone borders. They are also less likely to pay bribes for these local public services.

These are the central findings of research by Sascha Becker, Katrin Boeckh, Christa Hainz and Ludger Woessmann, published in the February 2016 issue of the Economic Journal. Their results show that formal public institutions of the past can leave a long-lasting legacy through cultural norms – even after generations of being governed by other authorities.

To test whether the cultural norms originating in the Habsburg Empire still endure today, the study analyses data from the 2006 Life in Transition Survey, which provides measures of trust and corruption in East European countries. The specific focus is on Poland, Ukraine, Romania, Serbia and Montenegro – all countries where communities on two sides of the former Habsburg border have been sharing a common statehood for generations. To identify the genuine enduring effect of the Habsburg Empire, the researchers restrict their analysis to a comparison of individuals living in communities located within 200km of each other on either side of the long-gone Habsburg border.

The results suggest that the Habsburg Empire is indeed still visible in people''s cultural norms and interactions with their state institutions today. Individuals living in locations that used to be territory of the Habsburg Empire have higher trust in courts and police than those outside the borders. These trust differentials also transform into differences in the extent to which bribes have to be paid for these local public services.

Evidence from a firm dataset – the Business Environment and Enterprise Performance Survey – corroborates the general pattern of results derived from the household dataset. Firms on the Habsburg side of the long-gone border within the same country have higher trust in the courts.

The researchers also analyse whether past exposure to the cultural norms of the Habsburg Empire fostered trust levels in central public institutions, such as the president or the parliament, or indeed in other people more generally, perhaps reflected through membership of civic organisations. They find no significant evidence of such effects, which suggests that it was local interaction with bureaucrats that was key.

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.

Rather, it seems that a role may have been played by 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.

''The Empire Is Dead, Long Live the Empire! Long-run Persistence of Trust and Corruption in the Bureaucracy'' by Sascha Becker, Katrin Boeckh, Christa Hainz and Ludger Woessmann is published in the February 2016 issue of the Economic Journal. A VoxEU summary of the research is available here:

http://www.voxeu.org/article/habsburg-empire-and-long-half-life-economic-institutions

Sascha Becker is at the University of Warwick. Katrin Boeckh, Christa Hainz and Ludger Woessmann are at Ludwig-Maximilians-University Munich.