Financial Crisis in a Socialist Setting: Impact on Political Behavior, Social Trust, and Economic Values / Ran Abramitzky, Netanel Ben-Porath, Victor Lavy, Michal Palgi.

Format:

Book

Author/Creator:

Abramitzky, Ran.

Contributor:

National Bureau of Economic Research.

Ben-Porath, Netanel.

Lavy, Victor.

Palgi, Michal.

Series:

Working Paper Series (National Bureau of Economic Research) no. w30918.

NBER working paper series no. w30918

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2023.

Summary:

Research on the political and social impacts of financial crises has focused chiefly on free market economies, hindering our understanding of their effects in other settings. We exploit an episode of a financial crisis that hit the Israeli kibbutzim to study its impact in a socialist context. Contrary to findings in capitalistic economies, the crisis led to increased support of liberalized labor markets and reduced support for leftist political parties. These effects persisted in the long run, especially among the young. The crisis also reduced trust in leadership, but trust was restored shortly after agreements to settle the debt were signed, relieving the severity of the crisis. Our findings suggest that economic shocks may have different effects in a free market and socialist systems, in both cases leading individuals to question their current system.

Notes:

Print version record

February 2023.