The Shadows of a Shattered Economy: How Persistent are Increases in Extremist Voting?⋆

Abstract

Economic shocks can trigger sharp increases in extremist voting (e.g., de Bromhead et al., 2013, Margalit, 2019). However, is the rise in extremist voting persistent over time or rather short-lived? I answer this question by exploiting geographic variation in the exposure to an economic crisis in interwar Germany while utilizing the exceptionally high number of Federal elections during this period. I show that having suffered from the economic collapse unfolding in the wake of the 1923 Ruhr Occupation caused a short-term six-percentage-point increase in left-wing extremist voting that vanished within eight months. I further document that repeated exposure to economic shocks leads to a anew overproportional increase in the support of extremist parties. To counteract endogeneity problems, I rely on Synthetic Control Groups for statistical inferencing.

Keywords: Economic Crises, Political Radicalization, Political Extremism, Economic Voting, Economic History