When autocrats fail: Bismarck and the socialists

Category: Applied Microeconomics and Organization Seminar
When: 03 November 2021
, 14:15
 - 15:30

Title: When autocrats fail: Bismarck and the socialists


In this paper, I examine whether autocratic regimes can weaken their opposition by employing a carrot and stick strategy. I analyze Bismarck’s famous attempts to reduce support for the socialist party by introducing social insurance and repressive anti-socialist laws in late 19th century Germany. In contrast to Bismarck’s goal, I find that the socialist party gained in constituencies more affected by his policies. For identification, I exploit local and industry-specific variation in treatment intensity due to ex-ante existing local healthcare and detailed lists on forbidden socialist organizations. This variation allows me to use a difference-in-differences as well as a shift-share approach. As mechanisms, I highlight that the socialist party attained power of interpretation over the policies and successfully evaded the policies by moving its activities into the underground and exploiting one loophole in the health insurance.