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Inequality, macroeconomic performance and political polarization: a panel analysis of 20 advanced democracies

Author

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  • Christian R. Proaño
  • Juan Carlos Peña
  • Thomas Saalfeld

Abstract

This paper investigates the macroeconomic and social determinants of voting behavior, and especially of political polarization – defined here as the increasing electoral success of far-right and far-left parties – in 20 advanced countries using annual data from 1970 to 2016 and covering 291 parliamentary elections. Our analysis indicates that the link between income inequality and political polarization appears to have significantly changed over the last 20 years. Indeed, we find that both average net income inequality, as well as the bottom 10% income share are statistically linked to the recent success of far-right parties (but not of far-left parties), while the top 10% or top 20% income shares are not. The link of income inequality and political polarization, and in particular the increasing success of far-right parties, thus seems to be based on the deterioration of the relative economic position especially of the poorest fraction of the population.

Suggested Citation

  • Christian R. Proaño & Juan Carlos Peña & Thomas Saalfeld, 2024. "Inequality, macroeconomic performance and political polarization: a panel analysis of 20 advanced democracies," Review of Social Economy, Taylor & Francis Journals, vol. 82(3), pages 396-429, July.
    • Handle: RePEc:taf:rsocec:v:82:y:2024:i:3:p:396-429
    DOI: 10.1080/00346764.2022.2047768
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    Citations

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    Cited by:

    1. Philipp Mundt & Simone Alfarano & Mishael Milaković, 2022. "Survival and the Ergodicity of Corporate Profitability," Management Science, INFORMS, vol. 68(5), pages 3726-3734, May.
    2. Schulz, Jan & Mayerhoffer, Daniel M., 2021. "A network approach to consumption," BERG Working Paper Series 173, Bamberg University, Bamberg Economic Research Group.
    3. Sahm, Marco, 2022. "Optimal accuracy of unbiased Tullock contests with two heterogeneous players," BERG Working Paper Series 175, Bamberg University, Bamberg Economic Research Group.
    4. Savin, Ivan & Mundt, Philipp, 2022. "Drivers of productivity change in global value chains: Reallocation vs. innovation," Economics Letters, Elsevier, vol. 220(C).
    5. Schmitt, Sefanie Y. & Bruckner, Dominik, 2022. "Unaware consumers and disclosure of deficiencies," BERG Working Paper Series 178, Bamberg University, Bamberg Economic Research Group.
    6. Christian R. Proaño & Giorgos Galanis & Juan Carlos Peña, 2025. "On the macro-political dynamics of conflict inflation," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 20(3), pages 725-745, July.
    7. Mundt, Philipp & Cantner, Uwe & Inoue, Hiroyasu & Savin, Ivan & Vannuccini, Simone, 2021. "Market selection in global value chains," BERG Working Paper Series 170, Bamberg University, Bamberg Economic Research Group.
    8. Mark Setterfield, 2025. "The COVID pandemic and its aftermath: missed opportunities for avoiding a future of Authoritarian Neoliberalism," Working Papers 2510, New School for Social Research, Department of Economics.
    9. Salla Simola & Jeremias Nieminen & Janne Tukiainen, 2023. "A century of partisanship in Finnish political speech," Discussion Papers 160, Aboa Centre for Economics.

    More about this item

    JEL classification:

    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State
    • D6 - Microeconomics - - Welfare Economics
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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