The European Trust Crisis and the Rise of Populism

134 Pages Posted: 20 Nov 2017

See all articles by Yann Algan

Yann Algan

Sciences Po

Sergei Guriev

Sciences Po; Centre for Economic Policy Research (CEPR)

Elias Papaioannou

London Business School

Evgenia Passari

Université Paris Dauphine

Date Written: November 2017

Abstract

We study the implications of the Great Recession for voting for anti-establishment parties, as well as for general trust and political attitudes, using regional data across Europe. We find a strong relationship between increases in unemployment and voting for non-mainstream, especially populist parties. Moreover, increases in unemployment go in tandem with a decline in trust in national and European political institutions, while we find much attenuated effects of unemployment on interpersonal trust. The correlation between unemployment and attitudes towards immigrants is muted, especially for their cultural impact. To advance on causality, we extract the component of increases in unemployment explained by the pre-crisis structure of the economy, in particular the share of construction in regional value added, which is strongly related both to build-up and the burst of the crisis. Our results imply that crisis-driven economic insecurity is a substantial driver of populism and political distrust.

Keywords: crisis, Europe, Immigration, industrial structure, populism, Trust, voting

JEL Classification: A13, E02, F02, F22, F33, F68, J15, O43

Suggested Citation

Algan, Yann and Guriev, Sergei and Papaioannou, Elias and Passari, Evgenia, The European Trust Crisis and the Rise of Populism (November 2017). Available at SSRN: https://ssrn.com/abstract=3074443

Yann Algan (Contact Author)

Sciences Po ( email )

27 rue Saint-Guillaume
Paris Cedex 07, 75337
France

Sergei Guriev

Sciences Po ( email )

27 rue Saint-Guillaume
Paris Cedex 07, 75337
France

HOME PAGE: http://econ.sciences-po.fr/staff/sergei-guriev

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Elias Papaioannou

London Business School ( email )

Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom

Evgenia Passari

Université Paris Dauphine ( email )

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