Populism and Austerity : An Inquiry

Sammanfattning

The spectre of populism is haunting Europe. Instead of exorcising it, the powers of Europe may have conjured it into being in a more potent form through austerity. This thesis investigates whether austerity affects support for populist parties in a non-linear manner and whether historical economic structures condition the political responses to austerity. In addition, differences in responses between the far left and the far right to changes in the regional shares of foreign nationals are analysed. Using a regional dataset, 126 regions in eight European countries are analysed between 1980 and 2015. The method utilises local projections in conjunction with a Bartik instrument that combines national spending-contraction episodes with regional sensitivities. Austerity’s political effects are shown to be nonlinear: small, weighted, regional austerity exposures decrease populist voting, whereas large, weighted exposures increase it. Furthermore, the electoral response to austerity is shown to be conditioned on historical economic structures: regions with historically high shares of public employment react more strongly to austerity, boosting populist voting, whereas a comparatively high historical labour share is shown to dampen the effect of austerity. Far-right vote gains are associated with increases in the regional shares of foreign nationals, whereas the same association is not observed for the far left. In sum, this thesis provides evidence for the political consequences of austerity being conditional on the shock size of spending consolidations and historical, regional economic structures.