## Friday, June 18, 2010

### The murder or departure of the Soviet Jews

Gal Backerman has this fascinating story about events from 1970 (40 years ago), where Soviet Jews started fighting for the ability to leave the USSR and go to Israel. By the end of 1971, 13,000 Soviet Jews were permitted to leave for Israel -- more than the number in the previous 10 years put together. In 1972, 32,000 people got the right to leave. The article ends with:

But the true solution was no less mortal a threat to the Soviets in the late 1980s than it had been in 1970. If they let the Jews leave, what would keep everyone else from doing the same?
When Soviet Jews finally emigrated en masse -- nearly 1.5 million by the end of the 1990s -- it looked like just another happy side effect of the Soviet Union's collapse, another wall crumbling. Forgotten were the decades of pushing from the inside. The Soviet Union might have gone the way of China and had an economic liberalization that ignored human rights. But this option was not open, because the Soviet Jews made it clear that any change would need to include open borders.
As a result, not only were hundreds of thousands of Soviet Jews able to build new lives, but forces were set in motion that would bring down the Berlin Wall and, eventually, an empire -- a world-shaking transformation born from the hopes once placed on a small airplane that never even left the ground.
This raises an empirical question: Was the departure of Jews important to the functioning of the USSR, or was it just a powerful political demonstration of the bankruptcy of the system? Does this kind of brain drain matter, or is it just a side show in the larger scheme of things? Does it matter to a country that its intellectual elite stays or leaves?

In India, for many decades, some of the brightest people left. Vikram Pandit and Anshu Jain now lead two of the top 10 financial firms of the world. Conversely, from the 1990s onwards, there has been an increasing phenomenon of India being able to pull back some of the brightest ones back into the country. So it's interesting to ask what are the consequences of elite flight or its reversal. Are these few who leave just a drop in the ocean or does it matter in the larger scheme of things?

Daron Acemoglu, Tarek A. Hassan and James A. Robinson have a recent NBER paper analysing a related story titled Social Structure and Development: A Legacy of the Holocaust in Russia where the abstract reads:
We document a statistical association between the severity of the persecution and mass murder of Jews (the Holocaust) by the Nazis during World War II and long-run economic and political outcomes within Russia. Cities that experienced the Holocaust most intensely have grown less, and cities as well as administrative districts (oblasts) where the Holocaust had the largest impact have worse economic and political outcomes since the collapse of the Soviet Union. Although we cannot rule out the possibility that these statistical relationships are caused by other factors, the overall patterns appear generally robust. We provide evidence on one possible mechanism that we hypothesize may link the Holocaust to the present --- the change it induced in the social structure, in particular the size of the middle class, across different regions of Russia. Before World War II, Russian Jews were predominantly in white collar (middle class) occupations and the Holocaust appears to have had a large negative effect on the size of the middle class after the war.

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