Mass Privatization, Distributive Politics, and Popular Support for Reform in the Czech Republic

This paper presents an empirical analysis of the role of privatization policy design in creating a constituency for economic reform, focussing on the case of the Czech Republic in the early 1990s. Drawing on a sample survey of 1459 Czech individuals in January 1996, we construct attitudinal indicators of the respondents’ reactions to reforms, their opinions on the roles of the state and the market in the economy, their perceptions of the legitimacy of transition, and their democratic values. Using ordered probit estimation techniques, and controlling for income and a variety of other characteristics of individuals, we find that receiving property through the extensive Czech program of restitution is strongly associated with higher support for reform, for markets, and for democracy. Concerning the voucher privatization program, we find that participants tend to be more supportive of reform than non-participants, but most of this effect is accounted for by the stronger support of participants who have retained their shares rather than selling shortly after receiving them. Among workers employed in firms of different ownership types, there is a weak tendency for workers in privatized firms to oppose reforms, but a clear propensity of entrepreneurs to support them. The results provide evidence for the hypothesis that the particular design of a reform program may have important effects on the attitudes of the citizenry, including their willingness to support the reform and their faith in markets and democracy.