What are the long-term political consequences of economic crises? We assess the enduring impact of the Great Recession on U.S. political outcomes. We employ a difference-in-differences approach, leveraging geographic variation in unemployment shocks. Contrary to claims that major recessions primarily boost anti-incumbent, far-right candidates, we find that counties more severely affected by the recession experienced a sustained increase in Democratic vote shares, particularly in Congressional elections. These effects persisted for at least 10 years. We demonstrate that these results are unlikely to be due to persistent economic decline, demographic changes, shifts in candidate ideology, or fiscal compensation spending. Instead, survey evidence suggests that the recession lowered expectations for upward mobility, likely increasing support for redistribution and thereby benefiting Democratic candidates. Our findings expand the literature by showing that (i) severe economic shocks do not necessarily favor right-wing populists, and (ii) major downturns can continue to influence electoral outcomes long after direct economic consequences have subsided.
Economic Insecurity Increases Affective Polarization and Outgroup-Aversion
(with Joanna Bryson).
[Abstract]
Political polarization -- the deepening divide between opposing social and political groups -- has become a pressing global challenge, often disrupting democratic governance. While some polarization is expected in politics, the factors driving extreme divisions remain unclear. Economic instability is frequently linked to rising polarization, but causal evidence is limited. Using panel survey data from the Netherlands and a difference-in-differences design, we show that economic insecurity significantly increases affective polarization, a form of division driven by emotional bias rather than policy disagreements. This effect persists for years, particularly among men, and is accompanied by increased distrust and social group clustering. Our findings suggest that economic insecurity is a key driver of polarization, highlighting the role of labor market stability in shaping political and social cohesion. Addressing economic precarity may help mitigate the spread of polarization in modern democracies.