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The European Trust Crisis and the Rise of Populism

Author

Listed:
  • Yann Algan

    (Département d'économie)

  • Sergei Guriev

    (Département d'économie)

  • Elias Papaioannou

    (London Business School (LBS))

  • Evgenia Passari

    (Université Paris-Dauphine)

Abstract

We study the implications of the Great Recession for voting for antiestablishment parties, as well as for general trust and political attitudes, using regional data across Europe. We find a strong relationship between increases in unemployment and voting for nonmainstream parties, especially populist ones. Moreover, unemployment increases in tandem with declining trust toward national and European political institutions, though we find only weak or no effects of unemployment on interpersonal trust. The correlation between unemployment and attitudes toward immigrants is muted, especially for their cultural impact. To explore causality, we extract the component of increases in unemployment explained by the precrisis structure of the economy, in particular the share of construction in regional value added, which is strongly related both to the buildup preceding and the bursting of the crisis. Our results imply that crisis-driven economic insecurity is a substantial determinant of populism and political distrust.

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  • Yann Algan & Sergei Guriev & Elias Papaioannou & Evgenia Passari, 2017. "The European Trust Crisis and the Rise of Populism," Sciences Po publications info:hdl:2441/2i9jel1usb8, Sciences Po.
  • Handle: RePEc:spo:wpmain:info:hdl:2441/2i9jel1usb85nr2j7tejsaldfu
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    JEL classification:

    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F68 - International Economics - - Economic Impacts of Globalization - - - Policy
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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