Public Economics and Policy Seminar - Stephanos Vlachos (University of Vienna)

In this paper, we study the link between self-interest and morality by leveraging a historical context with extremely high stakes: the introduction of ”Economic Aryanization” in the city of Bordeaux, France, during World War II. This policy aimed to ”permanently remove the Jewish influence in the economy” through the expropriation of Jewish firms. Regional authorities had significant autonomy in implementing the policy, which left substantial scope for competing firms to influence the procedure. We combine information on the universe of expropriated Jewish firms in the city of Bordeaux with the 1939 Yellow Pages to reconstruct the market structure of sectors in which Jewish firms operated. Our baseline estimation indicates that, conditional on a wide array of covariates, the risk of expropriation for a Jewish firm with a gentile competitor on the same street is 1.7 times greater than for a Jewish firm without a nearby gentile competitor. The survival analysis results are confirmed by estimating a structural model in which the distance between gentile and Jewish competitors is one of the drivers of denunciation. The effects are not present when looking at Jewish competitors.