We aim to gain a better understanding of the determinants and consequences of cultural heterogeneity. Our main focus is on the persistent differences across East and West Germany. Examples of specific research questions that we propose include the institutional determinants of trust, the dynamics of trust assimilation and of political preferences. In terms of consequences, we propose to analyze the role of heterogeneous starting conditions for trust in institutions and for labor market outcomes of East Germans after 1989. We will also investigate the role of sorting of East Germans across differentially productive firms (in East and West Germany) for labor market outcomes.