Does Austerity Cause Polarization?
41 Pages Posted: 16 Mar 2020 Last revised: 5 Nov 2020
Date Written: November 5, 2020
Most party systems have seen a considerable rise in polarization during the past decades. We show that fiscal policies have contributed to this development. Our macro-level analysis of 166 elections since 1980 finds that austerity increases both electoral abstention and votes for non-mainstream parties, thereby boosting the polarization of the party system. A detailed analysis of selected fiscal adjustments also shows that new, small and radical parties benefit most from austerity policies. Finally, survey experiments with a total of 8,800 respondents in Germany, Portugal, Spain and the United Kingdom indicate that the effects of austerity on polarization are particularly pronounced when the mainstream right and left parties both propose austerity policies. Austerity, therefore, is a major determinant of political destabilization in industrialized democracies.
Keywords: Fiscal policy; austerity; voting; public opinion; polarization; populism
JEL Classification: E62, H12, H4, H5, H50, H61, H62, H63, P16, P43
Suggested Citation: Suggested Citation