Comrades in the family? Soviet communism and demand for family insurance

Abstract

AbstractWe study how exposure to (Soviet) communism (EC), a political‐economic regime based on collectivist state planning, affected the preferences for family support, which we refer to as informal family insurance. Against the backdrop that ‘communism gave rise to the abolition of the family’, we document that it actually strengthened the preference (the demand) for informal family insurance without depressing individuals' preferences for social insurance. We exploit cross‐country and cohort variation in EC on more than 314,000 individuals living in 33 Central and Eastern European countries, among which 14 had been subject to communist regimes. We estimate that EC gave rise to 9.6 percentage point (pp) increase in the preference for family care for older parent and 4.3 pp increase in the support (both financial and nonfinancial) for children. These effects are explained by the strengthening of social and family networks that resulted from the erosion of generalized, interpersonal and institutional trust, rather than by ‘indoctrination effects’ during Soviet communism times.