The Long-Run Political Consequences of Economic Downturns: A Difference-in-Differences Analysis Across European Cohorts

This paper examines how exposure to a wide range of macroeconomic downturns shapes individual attitudes to politics and support for variety of populist attitudes in Europe. We try to capture the long-run and the contemporaneous exposure to crises. We first focus on economic downturns experienced during the impressionable years between ages 18 and 25. We use repeated cross-sectional data from the Eurobarometer surveys and exploit cross-country and cohort variation in exposure to recessions. Our baseline analysis relies on fixed-effects regressions controlling for individual characteristics and contemporaneous economic conditions. We then attempt to address identification concerns. To this end we implement a difference-in-differences design that compares cohorts differentially exposed to downturns within the same country. We find that individuals exposed to macroeconomic downturns in early adulthood are more likely to support populist parties and exhibit lower trust in national and European political institutions later in life.