Working Paper: CEPR ID: DP18049
Authors: Andrés Rodríguez-Pose; Javier Teruel-Davila; Neil Lee
Abstract: Economic change over the past twenty years has rendered many individuals and territories vulnerable, leading to greater interpersonal and interterritorial inequality. This rising inequality is seen as a root cause of populism. Yet, there is no comparative evidence as to whether this discontent is the consequence of localised interpersonal inequality or stagnant growth in ‘left-behind’ places. This paper assesses the association between levels and changes in local GDP per capita and interpersonal inequality, and the rise of far-right populism in Europe and in the US. The analysis —conducted at small region level for Europe and county level for the US— shows that there are both similarities and differences in the factors connected to populist voting on both sides of the Atlantic. In the US, neither interpersonal inequality nor economic decline can explain populist support on their own. However, these factors gain significance when considered together with the racial composition of the area. Counties with a large share of white population where economic growth has been stagnant and where inequalities have increased supported Donald Trump. Meanwhile, counties with a similar economic trajectory but with a higher share of minorities shunned populism. In Europe, the most significant factor behind the rise of far-right populism is economic decline. This effect is particularly large in areas with a high share of immigration
Keywords: Populism; Anti-system voting; Interpersonal inequality; Inter-territorial inequality; Economic growth; Europe; US
JEL Codes: D31; D72; R11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| economic decline + interpersonal inequality + racial composition (R23) | populist support (D72) |
| economic decline + interpersonal inequality (O17) | populist support (D72) |
| economic decline + interpersonal inequality + racial composition (high white population) (R23) | support for Donald Trump (K16) |
| economic decline + interpersonal inequality + racial composition (high minorities) (R23) | less support for populism (P16) |
| economic decline + rising interpersonal inequalities + anti-immigration sentiments (F66) | populism (D72) |
| economic decline (F44) | far-right populism (F52) |
| economic stagnation + rising inequalities (F62) | polarized voting behavior (D72) |