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Together We Stand, Divided We Fall: Political Polarisation and Income Inequality in the EU and the UK

Author

Listed:
  • Dionysia Rallatou
  • Michail Tsagris

  • Vangelis Tzouvelekas

    (Department of Economics, University of Crete, Greece)

Abstract

This paper investigates the link between political polarisation and inequality in Europe from 1989 to 2024. Using Bayesian Aldrich-McKelvey scaling, the DER polarisation index, and Araar decomposition, it traces polarisation's regional and structural foundations. Results show that polarisation has risen steadily, with Mediterranean and Central/Eastern Europe consistently more polarised than Western and Northern regions. Araar decomposition reveals that polarisation stems mainly from between-group alienation, not within-group identification. Divides over EU membership, class, and urban-rural residence account for much of the increase, with radical groups contributing disproportionately. Fixed-effects regressions confirm that inequality is the strongest determinant of polarisation: higher Gini values consistently predict greater antagonism. Economic growth reduces polarisation only under egalitarian conditions; when coupled with inequality, it amplifies divides. These findings highlight

Suggested Citation

  • Dionysia Rallatou & Michail Tsagris & Vangelis Tzouvelekas, 2025. "Together We Stand, Divided We Fall: Political Polarisation and Income Inequality in the EU and the UK," Working Papers 2501, University of Crete, Department of Economics.
    • Handle: RePEc:crt:wpaper:2501
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    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C38 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Classification Methdos; Cluster Analysis; Principal Components; Factor Analysis
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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