Institutions, parental selection, and locus of control

Abstract

Locus of control, that is, people's perception of how much influence they have over their lives, is an important predictor for economic outcomes - earnings, health and education, to name a few. This article uses difference-in-differences analysis to investigate the importance of the institutional environment for the development of locus of control, using the fall of the Berlin Wall as exogenous shock to the educational system in East Germany. Using data from the German Socioeconomic Panel (SOEP), we find that women showed less external locus of control following the fall of the Berlin Wall but less clear results for men.