Does Austerity Cause Polarization?

38 Pages Posted: 16 Mar 2020 Last revised: 7 Jul 2021

See all articles by Evelyne Huebscher

Evelyne Huebscher

CEU - School of Public Policy; University of Geneva - Department of Political Science and International Relations

Thomas Sattler

University of Geneva - Department of Political Science and International Relations

Markus Wagner

University of Vienna

Date Written: June 3, 2021

Abstract

In recent decades, governments in many Western democracies have shown a remarkable consensus in pursuing austerity during periods of strained public finances. In this paper, we show that these decisions have consequences for political polarization. Our macro-level analysis of 166 elections since 1980 finds that fiscal restraint increases both electoral abstention and votes for non-mainstream parties, thereby boosting party system polarization. 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 stand for fiscal restraint. Austerity is a substantial cause of political polarization and hence political instability 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

Huebscher, Evelyne and Sattler, Thomas and Wagner, Markus, Does Austerity Cause Polarization? (June 3, 2021). Available at SSRN: https://ssrn.com/abstract=3541546 or http://dx.doi.org/10.2139/ssrn.3541546

Evelyne Huebscher

CEU - School of Public Policy ( email )

Nador utca 9
Budapest, H-1051
Hungary

University of Geneva - Department of Political Science and International Relations ( email )

40 boulevard du Pont d'Arve
Genève 4, CH-1211
Switzerland

Thomas Sattler (Contact Author)

University of Geneva - Department of Political Science and International Relations ( email )

40 boulevard du Pont d'Arve
Genève 4, Geneve CH-1211
Switzerland

HOME PAGE: http://www.thomassattler.org

Markus Wagner

University of Vienna

Bruenner Strasse 72
Vienna, Vienna 1090
Austria

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