THE INCOME OF SOCIALIST UPPER CLASSES DURING THE TRANSITION TO CAPITALISM - EVIDENCE FROM LONGITUDINAL EAST-GERMAN DATA

We use data from the East German sample of the German Socio-Economic P anel (GSOEP) to examine the incomes of privileged individuals during t he transition from socialism to capitalism. The standard measure of el ite status is party membership, but this measure is likely to be inacc urate. Instead we identify the upper class by the ownership of a telep hone before the fall of the Berlin Wall. We find that the relative inc omes of those who had telephones has been consistently higher during t he transition compared to those who did not, and the effect remains ev en after controlling for ability to the greatest extent possible in th e data. This upper-class advantage has grown as the transition to free markets has continued. (C) 1998 Academic Press.