Vitaliia Yaremko, UC Berkeley Graduate Student, UC Berkeley Economics
Abstract: I assemble a novel dataset to examine the long-term consequences of the Soviet repressive policy called blacklisting. During the famine of 1932-33, blacklisting was applied to entire rural communities with two objectives – to accelerate the grain procurement and to antagonize rural residents against fellow well-off, entrepreneurial-type peasants, called “kulaks”. All members of blacklisted communities could be banned from trade and provision of crucial goods, prohibited from leaving the area of residence, and face harsh in-kind fines. The penalties were formally justified by blaming kulaks for the sluggish pace of procurement. I hypothesize that blacklisting had a long-lasting negative effect on sentiment toward economic success and market activity that is noticeable in modern economic performance. Using my village-level dataset of blacklisted communities, I find that blacklisting has negatively affected the socioeconomic outcomes of the affected localities during the post-1991 period, when Ukraine started its transition from command to market economy. Specifically, I employ a weather-based instrument for the locality’s blacklisting status to document that blacklisting significantly reduced the nightlight intensity (a proxy measure for economic development) of the affected localities. Additional evidence points to entrepreneurship and trust as channels for the observed effect. Overall, my results support the notion that policies that suppress economic freedoms and disrupt social structure can have persistent negative effects on economic performance.