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Does Austerity Cause Polarization?∗
Evelyne H¨ubscher
Central European University
Thomas Sattler
University of Geneva
Markus Wagner
University of Vienna
Forthcoming in the British Journal of Political Science
Abstract
In recent decades, governments in many Western democracies have shown a re-
markable consensus in pursuing fiscal austerity measures during periods of strained
public finances. In this paper, we show that these decisions have consequences for
political polarization. Our macro-level analysis of 166 elections since 1980 finds that
austerity measures increase both electoral abstention and votes for non-mainstream
parties, thereby boosting party system polarization. A detailed analysis of selected
austerity episodes also shows that new, small and radical parties benefit most from
austerity policies. Finally, survey experiments with a total of 8,800 respondents
in Germany, Portugal, Spain and the United Kingdom indicate that the effects of
austerity on polarization are particularly pronounced when the mainstream right
and left parties both stand for fiscal restraint. Austerity is a substantial cause of
political polarization and hence political instability in industrialized democracies.
Keywords: fiscal policy; political parties; turnout; polarization; elections
∗Previous versions of this paper were presented at the Research Seminar on Electoral
Democracy, University of Montreal, March 23, 2021, the EUI Political Science Research
Seminar, December 4, 2019; the Annual Meeting of the International Political Economy
Society (IPES), UC San Diego, November 15-16, 2019; the ‘Economic Consequences of the
Peace Centenary Conference’, University of Cambridge, September 9-10, 2019; the ECPR
General Conference, Wroclaw, September 3-6, 2019; the Annual Meeting of the American
Political Science Association (APSA), Washington D.C., August 29 - September 1, 2019;
and the Annual Meeting of the European Political Science Association (EPSA), Belfast,
June 20-22, 2019. We thank Larry Bartels, Ruth Dassonneville, Liesbet Hooghe, Yotam
Margalit, Sarah Wilson Sokhey, and participants at these conferences for comments. We
also thank Jascha Gr¨ubel, Akos Mate, Pedro Perfeito da Silva and Colin Walder for
excellent research assistance. The authors acknowledge financial support from the Swiss
Network for International Studies (SNIS). Thomas Sattler also acknowledges financial
support from the Swiss National Science Foundation, grant no. 165480.
1
1 Introduction
Fiscal policy in Western democracies was until recently characterized by a remarkable
consensus among governing parties. Especially during crises, but also more generally,
centre-left and centre-right governments agreed that fiscal restraint was the appropriate
policy to promote economic stability and growth (Blyth, 2013). As a result, left and
right political parties in many countries embarked on a path of fiscal austerity when in
government (Mudge, 2018; Hopkin, 2020). Key explanations for this trend turn to the con-
straints imposed by international integration (Konstantinidis, Matakos and Mutlu-Eren,
2019), the growing appeal of technocratic solutions (Alexiadou, Spaniel and Gunaydin,
2022) or the emergence of a new economic policy consensus (Blyth, 2013; Mudge, 2018).
In this paper, we show that this fiscal policy consensus among mainstream politi-
cians has increased party system polarization. Across Europe, party competition has
radicalized due to the decline of mainstream, centrist parties and the concomitant rise
of non-mainstream, radical competitors (De Vries and Hobolt, 2020). In Italy, where
many of these developments have been preempted, traditional parties have even almost
vanished and been replaced by new anti-establishment parties. Similar developments can
be seen in other countries, with the rise of Podemos and Vox in Spain, PVV and FVD in
the Netherlands, the Sweden Democrats in Sweden, the Left Bloc and Chega in Portugal,
or the Rassemblement National in France. Even ostensibly more stable countries such as
Germany have witnessed change, with the joint vote share of the Christian Democrats
and the Social Democrats falling from 76% in 1998 to below 50% in 2021.
Analyses of party system change and polarization generally focus on structural factors,
such as economic globalization and digitalization (e.g., Colantone and Stanig, 2018; Bac-
cini and Weymouth, 2021; Gallego, Kurer and Sch¨oll, 2022), new political cleavages and
changes to class politics (Halikiopoulou and Vlandas, 2016; Hooghe and Marks, 2018), the
growing salience of identities, culture and immigration (Norris and Inglehart, 2018), or
economic crises (Hern´andez and Kriesi, 2016; Alonso and Ruiz-Rufino, 2020) This litera-
2
ture, however, has mostly ignored the role that governments and their economic decisions
play in periods of economic insecurity. When economic shocks hit voters, governments
can mediate their effects in different ways. As the government’s main economic policy
instrument, fiscal policy is decisive in helping those who suffer from economic change
(Vlandas and Halikiopoulou, 2022). The fiscal policies that parties propose in this con-
text, thus, are important to understand the political behavior of voters. More broadly,
elites play an important role in explaining party system stability (Tavits, 2008).
If structural change creates demand for active fiscal policy, at least among a sub-
group of the electorate, fiscal austerity disappoints and alienates voters (Hopkin, 2020).
Specifically, fiscal restraint, unopposed by mainstream competitors, creates a pool of dis-
satisfied voters lacking a credible anti-austerity alternative among mainstream parties.
Where governments opt for fiscal cutbacks, voters therefore defect from mainstream par-
ties as they occupy similar positions on relevant policy areas (Spoon and Kl¨uver, 2019).
When defecting, some of these voters abstain from voting, while others decide to support
non-mainstream, often radical, political parties that reject austerity. In the aggregate,
both decisions lead to an increase in party system polarization.
Such an increase in party system polarization poses a challenge for policymaking in
democracies. A more polarized political landscape makes it more difficult to construct
stable government coalitions and sustainable policy solutions, both essential in times
of economic insecurity (Sartori, 1976; Dalton, 2008). This leads to considerable policy
uncertainty (Konstantinidis, Matakos and Mutlu-Eren, 2019). Struggles to build stable
coalitions and the associated damage to policy-making processes can be witnessed in
many European countries, such as Israel, Sweden, Italy or in particular Spain, which
held four general elections between 2015 and 2019. This suggests that solutions to these
challenges need to take into account political competition over key economic policies.
We examine the impact of fiscal austerity on political outcomes in two steps. First,
3
we use observational data from 166 elections in 16 OECD countries between 1980 and
2016 to examine how austerity is associated with turnout rates, non-mainstream party
vote share and party system polarization. Controlling for key economic and political fac-
tors, austerity correlates substantially with these political outcomes. If the government
implemented sizeable fiscal austerity packages during the legislative term, the vote share
of non-mainstream parties is up to 3.5 percentage points higher and voter abstention up
to 1.8 percentage points higher. This, in turn, increases polarization from one election to
the next. A more detailed analysis of selected large fiscal adjustment episodes also shows
that previously small, new and radical parties are the main beneficiaries of austerity.
The second part of the analysis uses survey experiments in Germany, Portugal, Spain
and the United Kingdom to uncover the micro-level mechanism that explains these macro-
level correlations. The survey experiment also indicates which parties lose or gain most
after austerity. The results show that voter responses to austerity depend on the policy
alternatives offered by mainstream parties. If both the mainstream left and right pro-
pose austerity, voters are more likely to turn towards smaller, non-mainstream parties or
abstain from voting than if one of mainstream party opposes austerity. Abstention and
defection to non-mainstream parties thus occurs when none of the mainstream parties
provide a credible anti-austerity alternative.
2 The political effects of austerity
2.1 Fiscal adjustment, mainstream parties and polarization
In recent decades, fiscal adjustment has become a common policy of mainstream parties,
both of the center-right and the center-left. These adjustment measures, often sum-
marised under the term ‘austerity’, refer to a set of fiscal decisions that aim at reducing
the fiscal deficit by a pre-specified amount. In practice, these decisions entail a mix of
spending cuts, such as a reduction in social spending, educational expenditures or public
investment, and tax increases, such as higher VAT or income taxes.
4
These austerity measures are a distributional shock that hurts a significant fraction of
voters, especially those in an economically precarious situation. Fiscal adjustments often
come with significant reductions in welfare provisions, especially social security trans-
fers or unemployment benefits (Armingeon, Guthmann and Weisstanner, 2016). Yet,
these are precisely the instruments that governments can use to alleviate the negative
impact on economically vulnerable voters of the great structural transformations of the
past decades, such as globalization or automation (Vlandas and Halikiopoulou, 2022;
Baccini and Sattler, 2020). For instance, recent research shows that social policies can
effectively reduce the risk that economically vulnerable groups face in open economies
(Hacker and Rehm, 2022). Moreover, tax increases, especially regressive taxes such as
the VAT, disproportionately hurt less privileged groups. As a result, fiscal adjustments
have distributional implications which affect an important part of the electorate.
Nevertheless, center-left governments nowadays do not distinguish themselves sub-
stantially from center-right governments in their position towards fiscal adjustments.
Center-left parties are equally likely, and by some accounts more likely, to pass ad-
justment packages compared to center-right governments (Armingeon, Guthmann and
Weisstanner, 2016; H¨ubscher and Sattler, 2017; Raess, 2021).1More broadly, center-left
parties nowadays tend to back economic models of which fiscal restraint is a fundamental
pillar (Mudge, 2018; Hopkin, 2020). For example, social democratic parties in Britain,
Germany, the Netherlands or Sweden have embraced orthodox economic policies, even
though their ideological foundations differ (Bremer and McDaniel, 2019).
This combination of limited competition among mainstream political parties over
fiscal adjustments and the distributional effects of these policies increases political polar-
ization, which is a key characteristics of party systems (Sartori, 1976; Dalton, 2008). We
1We confirm these findings using our own dataset in table A9 and figure A8 in the
Appendix.
5
define polarization as the degree to which political actors in a political system take dis-
tinct ideological positions and thus are ideologically dispersed along the left-right political
dimension. Following Dalton (2008), we take into account both the positions of political
parties and the relative popularity of these parties among voters (see also, Ezrow, 2007;
Dassonneville and Cakir, 2021).2Therefore, political polarization can change through
two mechanisms. First, polarization increases if existing parties move further towards
the edges of the political spectrum (holding vote shares constant). Second, polarization
increases if electoral support for (existing or new) political parties at the fringes of the
political spectrum increases (holding party positions constant). This gives more weight to
parties at the poles of the political system and increases the variance of ideological posi-
tions. Related to the second mechanism, polarization can increase indirectly when voters
who previously supported moderate parties decide to abstain from voting. This, again,
changes the relative weight of parties at the poles compared to those in the political center.
Our paper focuses on the second mechanism.3According to our argument, shifts
in electoral support after fiscal adjustments increase polarization, which is our main
2As Dalton (2008) argues, “a large party at the extreme would signify greater polar-
ization than a splinter party in the same position” (p. 906). We therefore conceptualize
polarization as “weighted party system dispersion” (Ezrow, 2007), the variance of party
positions weighted by vote shares. Some studies conceptualize polarization merely as
the distance between the most extreme parties or the (unweighted) variance of party
positions. While vote shares may be less central when party systems with a pre-defined,
clearly identifiable set of relevant parties are compared across countries, they matter when
examining how polarization changes within countries over time because previously small
parties grow or new parties emerge. This is the key mechanism increasing polarization
in our study.
3We, therefore, do not examine supply side effects that arise from mainstream party
repositioning. As we discuss below, we assume that mainstream party convergence is a
general trend that predates the decision to pursue austerity, so we treat party positions as
fixed in the time period we study. We also do so for methodological reasons, specifically
6
dependent variable. This happens because voters defect away from mainstream parties,
either by abstaining of by opting for more radical parties. We, therefore, examine non-
mainstream party vote and electoral abstentions as additional dependent variables.
2.2 Why voters leave: austerity and voter defection from main-
stream parties
When voters perceive mainstream parties as similar on key policy issues, in our case fiscal
policy, some voters defect from these parties (Spoon and Kl¨uver, 2019). To understand
this process, let us first look at a scenario where the mainstream left party is in gov-
ernment and implements fiscal austerity measures when faced with fiscal pressure. In
doing so, mainstream left parties reveal that their fiscal policy position diverges from the
policy preferences of an important part of their traditional electoral base. It is unlikely
that the mainstream right will take a position that is more critical of austerity than the
mainstream left party in government as parties rarely leapfrog each other ideologically.
Hence, voters who aim to express their disapproval of austerity should not then switch
to the mainstream right party; they should defect from mainstream parties altogether.
Next, take a scenario where a mainstream right party with a pro-austerity position is
in government and implements austerity. The mainstream left party could benefit from
taking up a contrasting stance, but their track record is likely to reduce the credibility
of such stances (Horn, 2021). Center-left parties are nowadays as likely to implement
austerity as center-right parties, and center-left parties in most Western countries have
regularly implemented major fiscal adjustment packages when in power, leading to a dilu-
tion of their party ‘brand’ (Lupu, 2014; Bodea, Bagashka and Han, 2021). As a result of
the parties’ past policy-making trajectory, many voters who oppose austerity will not see
the mainstream left as a valid, credible alternative (Horn, 2021; Karreth, Polk and Allen,
2013), and the result is again defection away from non-mainstream parties or electoral
to avoid that supply side effects contaminate our analyses.
7
abstention.4
The above logic rests on several assumptions. First, we assume that voters support
parties based on the perceived proximity of the party’s fiscal policy stance to their own
position. The literature generally uses two dimensions along which parties and voters
position themselves, an economic and a cultural dimension (e.g., Norris and Inglehart,
2018). For the sake of simplicity, we treat fiscal policy as the main policy lever for the
economic dimension. This does not require that all voters privilege economic issues at all
times. For some voters, fiscal policy may not be salient enough to trump other policy is-
sues (Giger, 2012). Such voters will not react to austerity measures and instead continue
to vote for the party that they supported in the past (keeping everything else constant).
Our assumption is that fiscal policy is a salient issue for a significant amount of voters,
for instance those who are hit by the distributional effects of austerity or who oppose to
fiscal adjustments for sociotropic reasons.
Second, we assume that government parties cannot fully spare their own base by im-
posing the burden of adjustment on voters of other parties. Meaningful fiscal adjustments,
which often amount to deficit reductions of 2% or more of GDP, generally involve adjust-
ments in most categories of the public budget.5Yet, adjustments in almost all areas of
the public budget lead to a reduction in voter support, especially when social policies are
concerned (Bansak, Bechtel and Margalit, 2021).6This is consistent with earlier findings
4We present the logic in a simplified form referring to two mainstream parties, but
the logic is similar for left- or right-wing coalitions. In addition, the effect of austerity
on voters should magnify for coalitions across political blocs, as these make it harder for
voters to distinguish the policy stance of coalition parties.
5The median adjustment package in our analyses amounts to 2% of GDP; large pack-
ages to 4% of GDP (see figure 2 and table A1).
6According to Bansak, Bechtel and Margalit (2021), voter support drops after cuts
in pension, welfare state and education expenditures. On the tax side, support also
drops after an increase in income and sales taxes. Only cuts in defense spending and
8
that social policies enjoy broad support in the population (Blekesaune and Quadagno,
2003) and limits the possibilities to manipulate public support by shifting the burden
of adjustment from one fiscal policy field to another. Moreover, not only left, but also
right voters negatively react to fiscal adjustments (H¨ubscher, Sattler and Wagner, 2021).7
Third, we assume that neither mainstream right nor mainstream left parties have
sufficient anti-austerity credibility to attract dissatisfied voters. This does not preclude
that these parties still emphasize social inequality differently, e.g. in their party mani-
festos. However, center-left and center-right parties broadly agree that low fiscal deficits
are a political priority, and their fiscal policy trajectories are similar when they are in
government.8Such past policy decisions of parties in government strongly impact voter
perceptions of party positions, more so than than electoral platforms (Adams, Ezrow and
Somer-Topcu, 2011; Fernandez-Vazquez, 2019). The fact that most centrist parties now
have a history of implementing austerity, as we discuss above, is therefore crucial.
Finally, and related to the previous point, mainstream parties implement austerity
despite the risk that dissatisfied voters abandon them. International political integra-
public employment do not lead to a drop in support (see Bansak et al. 2021: figure
4, p. 14). Governments, therefore, could only avoid a decline in public support by
concentrating cuts on public employment and/or defense. Defense spending, however,
generally amounts to significantly less than 2% of GDP, which limits the possibility to
mainly adjust via defense.
7Left voters reacting more strongly to adjustments, but a majority of right voters also
opposes fiscal cuts (see H¨ubscher et al. 2021: figure 3, p. 1755). Relatedly, overall public
support drops after austerity, and this does not differ between left or right governments
(e.g., Talving, 2017; Bojar et al., 2022). The structural changes discussed above likely
hit not only traditional center-left voters, but also many center-right voters, such as
conservative workers (Colantone and Stanig, 2018; Baccini and Weymouth, 2021).
8See our analysis of fiscal policy positions in party manifestos and fiscal policies of
government parties in section A.9 of the Appendix.
9
tion, the establishment of the Eurozone and the related fiscal rules induce governments
to pursue similar, low-deficit fiscal policies (H¨ubscher and Sattler, 2022). In addition,
international financial markets impose constraints on fiscal policy, especially on public
deficits and debt (Mosley, 2000). This pushes governments towards technocratic solutions
in search of economic credibility, which again favor restrictive fiscal policy (Alexiadou,
Spaniel and Gunaydin, 2022). In this context, a new, pro-austerity consensus emerged
that was actively promoted by powerful international institutions, such as the ECB or
the IMF (Blyth, 2013).
Hence, we expect that:
Hypothesis 1a (macro): Austerity measures reduce mainstream party vote share at
the next election.
Hypothesis 1b (micro): Citizens are less likely to vote for mainstream parties that
support austerity measures than for mainstream parties that oppose such measures.
2.3 Where voters go: voter defection and polarization
Voters who turn away from mainstream parties have two options: they can choose to vote
for a non-mainstream party, or they can abstain. This can happen out of protest without
clear expectation how this impacts fiscal policy. But there are also clear policy-related
reasons why voters would shift towards non-mainstream parties. First, dissatisfied voters
would select the non-mainstream party if they see this party as a credible, anti-austerity
alternative. Second, and relatedly, a voter may also expect that the electoral success
of non-mainstream parties induces a shift of the position of mainstream parties away
from austerity. Both reasons require that the voter weights the economic dimension of
political competition relatively highly, which is plausible when the distributional effects
of austerity on the voter are large.
10
Other voters may instead decide to abstain from voting altogether. While abstention
has many motivations (Smets and van Ham, 2013), disenchantment with democracy and
the political establishment are a prominent determinant (Hillen and Steiner, 2020). Spe-
cific policy decisions by government parties may also have a detrimental impact on polit-
ical participation. For instance, centrist voters may be loath to vote for non-mainstream
competitors, even when they disagree with mainstream parties’ austerity policy stances,
because they strongly disagree with the radical party’s position on the cultural dimen-
sion. As they are indifferent between equally unpalatable choices, such voters may abstain
rather than choose between unsatisfactory alternatives.
Both defection and abstention lead to an increase in party system polarization. As dis-
cussed in section 2.1, the defection to non-mainstream, often non-centrist parties bolsters
their overall share of electoral support, increasing the (weighted) dispersion of positions in
a party system (Ezrow, 2007).9Similarly, differential abstention by previous mainstream
party voters also increases the (weighted) dispersion of positions, as the relative share
of non-mainstream competitors increases. Ironically, then, the centripetal positioning of
mainstream parties in fiscal policy leads to an overall trend towards centrifugal competi-
tion in the political system as a whole.
Again, this logic rests on a number of assumptions. First, voters need to believe that
a growing vote share of non-mainstream parties reduces the likelihood of fiscal austerity.
This, in turn, requires that non-mainstream parties credibly position themselves against
austerity. Here, non-mainstream parties have an advantage because, unlike mainstream
opposition parties, they usually do not have a history of implementing fiscal adjustments.
Among the different types of non-mainstream parties, radical-left parties, for instance Die
9Defection to non-centrist parties can potentially decrease polarization, e.g. if most
voters choose one extreme alternative, creating a new consensus. Our starting point,
however, is the gradual transformation of political systems with mainstream parties that
still obtain a large vote share (cf. figure 1).
11
Linke in Germany, the Dutch SP or France Insoumise, seem an obvious choice for voters
who disapprove of fiscal cutbacks. Such parties take a clear stance against austerity and
have strongly opposed interference by international actors promoting fiscal adjustments,
such as the IMF or the EU. Some radical-left parties even emerged from anti-austerity
movements, for instance Podemos in Spain.
Radical-right parties can also be attractive to voters disappointed with fiscal policies.
They strategically position themselves as an alternative to the mainstream parties (De
Vries and Hobolt, 2020). Austerity is one area where radical right parties regularly do
so, and they often position themselves clearly on economic policies, especially when they
can oppose specific austerity measures (R¨oth, Afonso and Spies, 2018). In such cases,
radical-right parties have consistently defended social policies, e.g. pensions, against re-
trenchment proposals (Enggist and Pinggera, 2022).10 Voters, therefore, can have direct
policy-related motives when they select a radical-right party in response to fiscal austerity.
Some voters may also have broader motives that involve other issues related to auster-
ity. Radical-right parties often effectively link austerity to Europeanization, globalization,
the political establishment and immigration. Radical-right parties often advocate rolling
back Europeanization and globalization to lift the constraints imposed by international
integration. Examples are UKIP in Britain (Fetzer, 2019) or the Rassemblement National
in France, which actively courts dissatisfied voters by stressing its opposition to the po-
litical establishment and austerity policies.11 Many parties, such as Lega or the Golden
Dawn, also reframe austerity politics as a migration-related, cultural issue by promoting
‘welfare chauvinism’ (Vlandas and Halikiopoulou, 2022). This shifts attention to issues
where the radical right takes particularly clear positions, such as immigration and the EU.
10To give one example, candidates of the right-wing Finns Party take intervention-
ist economic positions that are consistently more ‘leftist’ than those of Finnish Social
Democrats (T¨ahtinen, 2021).
11See, e.g., Marine Le Pen in Die Zeit, May 6, 2021.
12
Second, we assume that non-mainstream parties have a chance either to participate
in government or to move the policy positions of mainstream parties. In many countries,
non-mainstream parties have participated in government, e.g. in Austria, Finland or
Italy. In line with our argument, radical parties, also those on the right, refrain from fis-
cal retrenchment when in government (R¨oth, Afonso and Spies, 2018). But even if radical
parties are not in government, their electoral success can be enough to shift positions of
other parties (Abou-Chadi and Krause, 2020). It, thus, makes sense for anti-austerity vot-
ers to support radical parties even if these parties will not be part of the next government.
Hence, we expect that:
Hypothesis 2a (macro): Austerity measures increase polarization at the next election.
Hypothesis 2b (micro): Citizens are more likely to choose non-mainstream parties
or to abstain from voting when all mainstream parties support austerity measures than
when one or both mainstream parties oppose austerity.
3 The macro pattern
3.1 Empirical design and data
The first part of our empirical analysis examines elections from sixteen advanced economies
between 1980 and 2016.12 This macro approach is useful to assess the relationship be-
12Data on national-level parliamentary elections is from the Comparative Manifesto
Project (CMP). The set of countries is limited by the availability of fiscal consolidation
data and includes: Australia, Austria, Belgium, Canada, Denmark, Finland, France,
Germany, Ireland, Italy, Japan, Portugal, Spain, Sweden, the United Kingdom, and the
United States. The number of elections per country (166 in total) varies between 8
(France, United Kingdom) and 14 (Australia).
13
tween fiscal policy and political changes at the party systems level. The country-level
analysis captures the empirical relationship between fiscal policy and the patterns of
national election outcomes and the associated systemic changes. Given that we are as-
sessing the variation in fiscal policy across all elections, our counterfactual is the absence
of fiscal consolidation (in a given electoral cycle).13 A macro-level approach necessarily
compromises on insights about the underlying mechanisms and the motivations of voter
behavior. We therefore complement the macro analysis with an experimental analysis of
individual-level behavior in section 5.
We examine three different outcomes: the vote for non-mainstream parties; electoral
turnout; and party system polarization. We identify non-mainstream parties based on
the party family classification by the CMP project (see also Spoon and Kl¨uver, 2019).
For our purposes mainstream parties are those that support the current economic order
and related economic policies, notably low deficits and fiscal restraint. We classify social
democratic, christian democratic, conservative, liberal and agrarian parties as mainstream
parties. Electoral abstention is measured as the share of eligible voters who do not par-
ticipate in an election. Political polarization is the dispersion of positions of political
parties, weighted by their vote shares. This indicator increases when more voters vote
for parties at the fringes of the political spectrum. As in Dassonneville and Cakir (2021),
we compute polarization as pPn
i=1 vi(pi−p)2, where pis the weighted mean of all the
parties’ ideological positions; piis the ideological position of party i,viis the share of
votes that party ireceives in an election, and nis the number of parties that participate
in the election. To measure the positions of political parties, we use the left-right index
from parlgov, which integrates the results from various expert surveys. The parlgov index
is time-invariant, which allows us to isolate the effect of voter decisions on polarization.
13The magnitude of the austerity impact may vary depending on the macroeconomic
context, but austerity should deprive a significant group of voters across all contexts. We
explore this in further analyses.
14
Figure 1: Average non-mainstream party vote, abstentions and polarization
over time
15
20
25
30
Non-Mainstream Vote
1980
1985
1990
1995
2000
2005
2010
2015
15
20
25
30
Abstention
1980
1985
1990
1995
2000
2005
2010
2015
1.8
1.9
2
2.1
2.2
Polarization
1980
1985
1990
1995
2000
2005
2010
2015
Note: Average values across the 16 countries per year for each variable.
Figure 1 shows that the temporal patterns for all three outcome variables are straight-
forward. On average, the vote share for non-mainstream parties doubled between the
1980s and today. The non-mainstream party vote share increases sharply from the mid-
80s to 2000 and from 2009 onwards. Abstention also steadily increased from below 20%
at the beginning of our period of analysis to almost 30% at the end. Finally, average
polarization increases considerably, with the sharpest increases between the mid-80s and
early 2000s and again from the mid-2000s onwards.
For our independent variable – fiscal consolidation – we use the events-based measure
by Devries et al. (2011) and updated by Alesina, Favero and Giavazzi (2019).14 Event-
based measures of fiscal consolidation qualitatively identify the timing and magnitude of
fiscal consolidation packages using policy documents from governments and international
organizations. This is now the standard approach of measuring fiscal consolidations be-
cause it directly captures fiscal policy decisions (Alesina, Favero and Giavazzi, 2019). Out
of the 166 legislative periods in our dataset, 91 periods include at least one consolidation
event. Among these, the degree of fiscal consolidation varies considerably. A median
14We use government policy rather than mainstream party positions as our key predic-
tor. Hence, our main test concerns actual policy rather than political rhetoric. Below,
we discuss the limitations of existing data measuring policy positions.
15
consolidation package aims at reducing the fiscal deficit by 1.9% of GDP, with a standard
deviation of 2.21%.
Our control variables largely follow from the literature on party system change and
polarization (see section 2). These include macroeconomic conditions (represented by
real GDP growth and the unemployment rate), the degree of international openness and
net migration. These variables enter our model as changes from one legislative period to
the next. We also account for early elections, single- vs. multi-party government, and
the permissiveness of the electoral system by controlling for the electoral system (majori-
tarian vs. proportional) and the magnitude of electoral districts. Some of these variables
mostly account for cross-country variation, while our focus is on on over-time variation
within countries. Nonetheless, they account for changes after electoral systems change
(Best, 2012) and possibly affect how easily voters switch from one party to another.15
Table A1 shows the summary statistics.
Since we are interested in gradual change in electoral behavior over time, we use
the changes in the outcome variables from one election to the next as dependent vari-
ables. This also addresses the econometric problem that the outcome variables are not
stationary.16 Our analysis uses the following empirical specification:
∆yi,t =β0+β1Austerityi,t−1+β′
2Xi,t−1+dt+ci+ϵi,t
where irefers to the country and trepresents an election; yi,t refers to either votes for non-
mainstream parties, electoral abstentions, or polarization; Austerityi,t−1is the amount of
fiscal consolidation in the legislative period prior to the election; Xi,t−1includes the
15Data for the control variables come from Armingeon et al. (2019) and Bormann and
Golder (2013). For early elections, we follow Schleiter and Tavits (2016) and take the
difference between the maximum duration of the legislative term and the actual election.
We use a three-months threshold to identify elections that were held early.
16The panel unit root tests in Appendix table A2 reject the null hypothesis of a unit
root for the differenced, but not for the undifferenced outcomes variables.
16
control variables; dtare period-fixed effects; ciare country-fixed effects; and ϵi,t is an
error term. We also use alternative empirical models, notably models in levels rather
than differences and with a lagged dependent variable, and with a time trend. As we
show in the Appendix, the results from these models are the same.
3.2 Results
Table 1 presents our estimation results. For each outcome variable, we present three
specifications: without controls, with economic and political controls, and with country-
and period-fixed effects. The results show that the vote share for the non-mainstream
parties, electoral abstention and polarization increase from one election to the next when
the government implements a fiscal consolidation packages during the legislative term.
This effect is statistically significant and robust across different specifications.
The magnitudes of the estimated effects are substantive. A median consolidation
package, which aims at reducing the fiscal deficit by 1.9% of GDP, increases votes for
non-mainstream parties by 1.3 percentage points on average. A large package that is one
standard deviation above the median, which aims at reducing the fiscal deficit by 4.1%,
increases non-mainstream party votes by 2.9 percentage points. The effect of austerity on
electoral abstention is smaller. A median consolidation package is predicted to increase
abstention by 0.6 percentage points, while a large package increases abstention by 1.2
percentage points.
These effects then translate into an important increase in the polarization of the
party system. Figure 2 plots the predicted effect of fiscal consolidations on polarization
across the empirically observable distribution of consolidations. For instance, a large
consolidation package (one standard deviation above the median consolidation) increases
polarization by ca. 0.1 units. This effect increases up to 0.15 for very large packages that
reduce the deficit by 7-8% of GDP. Compared to the empirically observable increase in
polarization during the past decades, this estimated impact of austerity on polarization is
17
Table 1: Effect of austerity on political outcomes
∆Non-mainstream ∆Abstentions ∆Polarization
(1) (2) (3) (4) (5) (6) (7) (8) (9)
Consolidationt−10.693 0.726 0.652 0.297 0.395 0.280 0.019 0.018 0.019
(0.225) (0.284) (0.274) (0.116) (0.146) (0.179) (0.006) (0.007) (0.007)
∆Growtht−1-0.136 -0.124 0.263 0.216 -0.001 -0.001
(0.244) (0.232) (0.147) (0.159) (0.005) (0.005)
∆Unemploymentt−10.011 -0.174 -0.187 -0.252 0.003 -0.002
(0.335) (0.324) (0.186) (0.194) (0.005) (0.006)
∆Globalizationt−1-0.640 -0.138 0.020 -0.094 -0.006 0.001
(0.231) (0.352) (0.179) (0.234) (0.007) (0.009)
∆Migrationt−10.003 0.002 0.001 -0.002 -0.000 0.000
(0.006) (0.006) (0.002) (0.003) (0.000) (0.000)
Multipartyt−10.153 -0.140 0.393 -0.104 -0.008 0.013
(1.083) (1.380) (0.721) (0.908) (0.024) (0.029)
EarlyElect-2.674 -2.048 0.189 0.160 0.007 0.030
(1.481) (2.137) (0.586) (0.856) (0.024) (0.038)
Proportionalt0.911 -3.762 -2.131 -6.051 0.072 0.016
(4.006) (6.546) (1.653) (4.811) (0.058) (0.189)
Mixedt-0.581 0.864 0.279 -0.381 0.007 0.118
(1.597) (4.597) (1.355) (3.841) (0.047) (0.122)
DisMagnitudet-0.662 1.432 0.717 0.941 -0.036 0.030
(2.170) (2.960) (0.649) (1.379) (0.027) (0.056)
Constant 0.343 3.266 0.552 0.666 0.668 4.097 0.003 0.017 -0.098
(0.510) (2.224) (8.289) (0.357) (0.842) (4.437) (0.012) (0.032) (0.184)
Country FE No No Yes No No Yes No No Yes
Period FE No No Yes No No Yes No No Yes
R20.04 0.10 0.20 0.02 0.08 0.16 0.07 0.10 0.21
F9.508 2.182 1.895 6.569 1.829 1.349 9.532 1.684 1.397
p0.002 0.022 0.007 0.011 0.060 0.125 0.002 0.089 0.100
N166 166 166 166 166 166 166 166 166
Robust standard errors in parentheses.
18
quite substantial. Figure 1, for instance, shows that average polarization across countries
has increased by ca. 0.25 units between 1980 and 2015. As table A1 shows, the average
increase in polarization during an electoral period in our dataset is 0.028. A median
austerity package, therefore, roughly doubles the average growth in polarization, and a
large one increases it by a factor of three to four.17
Among the control variables, the variables representing macroeconomic circumstances
do not have a consistent effect on the outcomes. This suggests that the impact of aus-
terity does not simply capture the impact of the bad economic conditions that are often
(albeit not always) associated with fiscal austerity packages.
Figure 2: Predicted change in polarization over empirically observable degrees
of austerity
median
consoli-
dation
one std.
above
median
two std.
above
median
0
.2
.4
.6
Fraction
0
.1
.2
.3
.4
ΔPolarization (predicted)
0 2 4 6 8 10 12
Fiscal consolidation
Note: Prediction based on model (7) in table Table 1; solid line shows predicted change
in polarization (left y-axis) with 90% confidence intervals; bars show the distribution
of fiscal consolidations (right y-axis).
17Most consolidation packages are below 8% of GDP. One package in Portugal during
2011-2015 is at 11.9%, a unique and extreme case. We include it in our plot because it
is part of the empirically observable distribution. In additional analyses, we exclude this
extreme austerity episode, and the results are the same. See figure A5 in the Appendix.
19
A series of supplementary analyses examines the robustness of these findings. First,
we examine the sensitivity of our results to alternative model specifications and estimate
models in levels with a lagged dependent variable in table A3. The results are very
similar to the ones presented above. Second, we disaggregate the non-mainstream party
variable and examine different non-mainstream parties separately in figure A1 and table
A4. The results suggest that most of the effect of austerity in non-mainstream parties
works through left parties and the groups of ‘other’ parties without a specific family label.
Third, we analyze the characteristics of fiscal austerity packages in greater detail in tables
A5 and A6. We do not find evidence that spending- or tax-based consolidations affect
elections differently. We also disaggregate consolidation by the timing during the legisla-
tive term. Consolidations in the year before the election year seem to have the strongest
impact, but consolidations at the beginning of the term still considerably impact the elec-
tion. Fourth, table A7 and figure A2 examine how the effect of austerity on the outcome
variables differs across sub-periods of five years. While the number of observations and
austerity episodes in each period is fairly small, the results for non-mainstream vote and
polarization show an upward trend in the effect of austerity, with a temporary decline
in the late 1990s / early 2000s. The impact of austerity is strong after 2010, but it was
already substantial throughout the 1990s. As figure A3 shows, these were also the two
periods in which most austerity episodes occurred. Fifth, figure A4 shows that the results
do not depend on the inclusion of a particular country.
Finally, our key variable, consolidation events, reflects government policy rather than
party positions. We opted for this policy variable because it captures what parties do
rather than what they say. To address the role of policy positions more directly, we turn
towards a more qualitative assessment of key cases and an experimental analyses below.
20
4 Who wins? Who loses? Evidence from large fiscal
adjustments
To further substantiate our macro-level results and to link the analyses above to our
micro-level analysis below, we examine selected electoral cycles during which large fiscal
adjustments aiming at deficit reductions of 5% of GDP or more were implemented. This
yields a list of ten large adjustment episodes, with five belonging to the period before
and five to the period after the ‘Great Recession’. Looking at electoral cycles from both
periods will show that the mechanisms are not unique to the extreme economic crisis that
started in 2008.
Table 2: Legislative periods with cumulative austerity >5% of GDP (pre 2008
and post 2008 crisis)
Austerity ∆ Gov Support ∆NMP ∆Abstention ∆Polarization
Pre-2008 Crisis
Finland (1991-1995) 7.9% -1.2% 1.9 -0.2% 0.07
Sweden (1994-1998) 6.5% -8.9% 5.6 5.4% 0.2
Belgium (1981-1985)* 5.9% -4.7% -5.5 0.9% -0.02
Ireland (1982-1987) 5.9% -15% 4.3 -0.4% 0.17
Italy (1992-1994) 5.8% -46.6% 10.8 1.2% 0.51
Post-2008 Crisis
Portugal (2011-2015) 11.9% -11.7% 8.2 2.2% 0.23
Ireland (2011-2016) 10.1% -23.5% 13.5 4.4% 0.4
Ireland (2007-2011) 8.4% -29.6% 8.7 -2.9% 0.17
Spain (2011-2015/2016) 7.8% -13.2% 14.5 -4.3%/3.4% 0.59
Belgium (2010-2014)* 5.7% -1.5% -5.2 -0.2% -0.10
Note: Austerity = cumulated consolidation during electoral term; ∆ Gov Support = change
in vote share of parties in government; ∆NMP = change in non-mainstream party vote
share; ∆ Abstention = change in turnout. Data on fiscal consolidation events by Alesina et
al. (2019), other by www.parlgov.org and the Comparative Manifesto Project. * Note that
in Belgium, voting is compulsory, with little fluctuation in turnout.
Table 2 lists the countries, the legislative period and the cumulative size of the ad-
justment packages implemented during a given electoral cycle as well as changes in non-
mainstream party vote, abstention and polarization.18 Here we provide a synthesized
18Tables A10 and A11 in the Appendix provide a detailed overview of losses and gains
of all parties.
21
account of the effects of austerity, implemented by mainstream parties and uncontested
by mainstream opposition parties.
Mainstream party support and positions: For all elections after substantive fiscal ad-
justments, the vote share of government parties declined, often considerably. The com-
bined decline can be as little as 1 percentage point (Finland, 1995) or as high as 30
percentage points (Ireland, 2011).19 A closer look also confirms that the mainstream par-
ties in opposition presented a credible alternative for some, but not all dissatisfied voters.
In almost all cases, the mainstream opposition did not fully absorb the loss of support
for government parties. For instance, the Finnish Social Democrats or the Portuguese
Socialists, in opposition in 1995 and 2015 respectively, gained voters after austerity mea-
sures, but these gains were substantially lower than the decline in the combined vote
share for government parties.
Non-mainstream party support: The difference between government party losses and
mainstream opposition gains was absorbed by non-mainstream parties. All but one aus-
terity episode was followed by an increase in the vote share of non-mainstream parties.
Prior to the Great Recession, this increase varied between 2 percentage points in Finland
to slightly over 5.5 percentage points in Sweden. After the Great Recession, this increase
varies between 8 percentage points in Portugal and 14.5 percentage points in Spain. The
type of non-mainstream parties that benefited from austerity varies widely. While in
Finland leftist fringe parties, such as the Social Democratic party and the Left Alliance,
experienced an increase in voter support, Sweden saw an increase in the support of the
conservative Christian Democrats (Kd) and the leftist/communist V¨ansterpartiet. After
the Great Recession, we often see parties to the left of the mainstream parties winning
votes, e.g., Podemos (0% to 12.7%) in Spain, the Portuguese Bloco de Esquerda (5.4% to
19The general election of 1994 in Italy was the first election after large scandals related
to corruption and party financing at the highest levels of government, which led to the
collapse of the post-WWII Italian party system, overshadowing austerity measures. We
thus disregard this case in our discussion.
22
10.6%), or the Irish Worker’s Party (prior to the Great Recession).
Turnout : We also see an increase in abstention in five out of ten cases. The tendency
in abstention after fiscal adjustments is generally in the expected direction, although less
pronounced than for non-mainstream party vote.
5 The micro behavior
5.1 Survey and experiment design
We now turn to providing micro-level evidence of the mechanisms that create the macro-
level patterns described in the previous sections. In a survey experiment fielded in four
countries, we examine voter reactions to different fiscal austerity proposals from the main
centre-left and centre-right parties. This means that we can test which parties voters sup-
port if both mainstream parties advocate austerity.
Importantly, this experimental approach allows us to vary the positions of the main
political parties towards austerity. In an observational study, assessing how the main
parties’ positions on austerity matter for vote choice is challenging as many party- and
country-specific factors co-vary together with the policy option pursued. Indeed, a key
counterfactual, namely that either both mainstream parties or even just the mainstream
left oppose austerity, is arguably rarely observed. Moreover, an experiment allows us
to present specific, clear policy stances by mainstream parties, so we can be sure that
behavior is driven by responses to the policy dimension we manipulate. Moreover, as
argued above, it is difficult to gather data on opposition party responses to government
austerity programs.
We conducted original survey experiments in Britain, Germany, Portugal and Spain,
cases chosen for multiple reasons.20 First, a survey in multiple countries allows us to un-
20We also ran the experiment in Italy just after the 2018 election, but this experiment
was difficult to adapt to that country given that the government was in transition and
two non-mainstream parties dominated the party system. While we used Forza Italia
23
cover commonalities in responses across different contexts, enhancing our confidence in
the generalizability of the results. Second, voters in the different countries were exposed
to differing degrees of austerity in the recent past. Portugal and Spain experienced a
debt crisis and received international bail-out packages; the UK was hit by a short-term
financial crisis and long-term austerity, but was not bailed out internationally; and Ger-
many has proved comparatively resilient. Third, the countries also have different party
systems that create variation in the types of contestation around austerity. In Spain and
Germany, party-based opposition to austerity is strongest on the radical left (Podemos
and Die Linke). In Portugal, the radical left is opposed to austerity, but so is, in a more
moderate way, the Socialist Party. In the UK, Labour used to take a market-friendly
approach in the last decades, but moved towards a strong anti-austerity stance during
the Corbyn years.
Table 3: Main political parties per country
Center Left Center Right
Germany Social Democrats (SPD) Christian Democrats (CDU/CSU)
Portugal Partido Socialista (PS) Partida Social Democratica (PSD)
Spain Partido Socialista (PSOE) Partido Popular (PP)
UK Labour Party Conservative Party
We conducted an experiment embedded in population-based surveys. The surveys
were implemented by respondi, making use of different country-specific online access pan-
els. Quotas based on age and gender were implemented. The sample is restricted to
voting-age nationals. In each country, we surveyed around 2,200 individuals.21 We pre-
sented respondents with hypothetical scenarios concerning policy proposals by the two
main center left and center right parties listed in table 3. In the experiment we also varied
which party was described as the government party and which as the main opposition
party. We do this to be able to examine whether the credibility of the announcement
among voters differs for government and opposition parties.
and the Partito Democratico in our experiment, these were clearly not the most relevant
parties in the context at that time.
21Appendix sections C.3 and C.4 provide more details about the data collection process.
24
To illustrate the details of the experiment for the UK, we present a possible vignette
in table 4. Before respondents see the vignette, they are informed that their country has
experienced high fiscal deficits and rising public debt for several years. The vignettes
then presented respondents with the following varying information: party in government,
main opposition party, policy proposal of each party. The treatment (policy proposal in
the second row) could take one of the following two values: ‘cut spending and increase
taxes’ or ‘keep government spending stable without tax increases’. This yields in four
different combinations of policy proposals: (1) both parties want to cut spending, (2) the
center-left party keeps spending as is, while the center-right party cuts spending, (3) the
center-right keeps spending as is, while the center-left cuts spending, and (4) both parties
keep spending as is. We focus on the comparison between the ‘both cut’ scenario and
the two counterfactual scenarios (2) and (4), where either the mainstream left or both
mainstream parties keep spending as is. We disregard option (3), since it is unrealistic
that the center-right keeps spending as is while the left cuts. However, we kept this
option in the design of the experiment for sake of completeness.
Table 4: Experimental setup
Government Main Opposition Party
Labour Party Conservative Party
Policy proposal Keep government spending
stable without tax increases
Cut spending and increase
taxes
Each respondent was presented with three – randomly selected – vignettes out of
the eight possible vignettes (four possible proposal vignettes ×two possible government-
opposition assignments as outlined above). After each vignette the respondents had to
indicate which party they would vote for given the policy scenarios presented. Specifically,
we asked: ‘For which party would you vote in the next election?’. This became our
outcome variable (DV).22 All political parties were included as response options, not just
22Given that we have three assessments per respondent, the following analyses cluster
standard errors by respondent.
25
the two main parties. We also allowed respondents to state ‘Would not vote’ and ‘Don’t
know’. Respondents’ reactions to these vignettes indicate how the combination of party
and policy proposal influences their vote choice.
5.2 Results
Figure 3 presents results of a multinomial logistic regression model using vote choice as
dependent variable and the policy treatment as independent variables. The baseline cate-
gory is the scenario in which both parties propose to keep spending as it is. Here, we code
non-mainstream parties as in the macro analysis, namely as radical-right, radical-left and
Green competitors. We always control for simple demographics (age, education, gender
and income) as well as for party choice in the prior election as well as economic ideology.
As noted above, we also varied which of the two parties was described as the gov-
ernment party. In our analyses, this is interacted with the austerity treatment, and the
results in figure 3 average over the government and opposition conditions. We do so be-
cause we did not find any statistically significantly different reactions to policy proposals
depending on whether the party was described as governing or not. While this is consis-
tent with our claim above that voter responses to austerity proposals do not depend on
who is in government, we do not see this as strong evidence, as it could just be that our
government-opposition treatment was somewhat abstract in the context of a hypothetical
scenario. We now turn to the key results.
The results support H1b, which stated that mainstream parties that support austerity
receive less support. When only the centre-right cuts while the centre-left promises to
maintain current levels of spending, the centre-left does particularly well (and the centre-
right particularly badly). However, the overall support for mainstream parties is similar
when both parties propose maintaining current levels or when only the left does. This is
easily visible when looking at the effects of the categories capturing ‘other mainstream
parties’, ‘other non-mainstream parties’ and ‘abstention’ in figure 3.
26
Figure 3: Fiscal consolidation and voter flows
CR CL Oth. ms. Non-ms. Abst.
-.15
-.1
-.05
0
.05
.1
R cuts
Both cut
R cuts
Both cut
R cuts
Both cut
R cuts
Both cut
R cuts
Both cut
Germany
CR CL Oth. ms. Non-ms. Abst.
-.15
-.1
-.05
0
.05
.1
R cuts
Both cut
R cuts
Both cut
R cuts
Both cut
R cuts
Both cut
R cuts
Both cut
UK
CR CL Oth. ms. Non-ms. Abst.
-.15
-.1
-.05
0
.05
.1
R cuts
Both cut
R cuts
Both cut
R cuts
Both cut
R cuts
Both cut
R cuts
Both cut
Spain
CR CL Oth. ms. Non-ms. Abst.
-.15
-.1
-.05
0
.05
.1
R cuts
Both cut
R cuts
Both cut
R cuts
Both cut
R cuts
Both cut
R cuts
Both cut
Portugal
Treatment effects on vote choice (baseline: both keep)
.
Note: Multinomial logistic regression with vote choice as DV and treatment as IV.
CR=Centre-Right, CL= Centre left, ms=mainstream. Three of four policy treatments
shown, baseline category: both parties propose to keep spending. Policy treatments
interacted with whether the left or right wing party was said to be in government.
Effects shown averaging over these two conditions. For full results with all parties, see
figures A9 to A12
The results also support H2b: what leads voters to abandon the left without reward-
ing the right is a context in which both parties support cuts. Thus, Figure 3 shows that
the vote for other parties increases in the ‘both cut’ scenario in all party systems, be they
mainstream or non-mainstream parties. Abstention increases as well, albeit to a lesser
extent. The effects of both parties promising austerity on voting for other parties and on
abstention are comparable across countries. Additional analyses show that it is voters
on both the left and right political extremes that are least likely to endorse mainstream
parties in a scenario where both parties endorse cuts (see figure A15 in the Appendix).
27
In terms of polarization, we can see that the vote for non-mainstream parties increases
across the board, even if not significantly in Portugal. In other words, voters’ reactions
to the experiment lead to more polarized party landscapes. More detail is provided in
the Appendix, which shows full results by country. There, we can see that in Germany
the left competitor party (Die Linke) benefits most if both main parties propose to cut
spending (figure A9). The same pattern exists in Portugal (figure A12), where the leftist
‘Bloco de Esquerda’ benefits most from a scenario in which both main parties propose
to cut. In Spain, Ciudadanos and Podemos, two relatively new competitors benefit from
voters defecting the main parties (figure A11). Overall, voters also move to comparatively
centrist parties such as the Lib Dems in the UK or Ciudadanos in Spain. While there is
movement to the extremes, voters also defect to mainstream alternatives.
Hence, the situation where both parties cut is particularly conducive to engendering
changes in voter decision-making, at least in terms of other party vote, non-mainstream
vote and abstention. This scenario essentially emulates the situation that most parties
faced in the aftermath of the Eurozone crisis or during any other prolonged economic and
fiscal crisis. The finding is also in line with the results from the macro-level analysis.
Finally, to link the micro-analysis back to our macro-level findings, we present aggregate-
level results from each proposal type in Figure 4. For this, we treat each vignette type as a
hypothetical election and present the aggregate results for our three macro-level outcome
variables: the change in vote share of non-mainstream parties, abstention, and left-right
polarization based on parlgov-provided expert scores for parties. For non-mainstream
party vote, we can see a strong increase in all countries, especially when both parties
pledge to implement an austerity package. The effects on turnout are smaller, which
coincides with the macro results. Polarization increases compared to the other two exper-
imental scenarios across all four countries, with the most pronounced effects in Germany.
The reduced level of polarization when only the right proposes to cut can be explained
by the increased support for the mainstream left, which lowers polarization.
28
Figure 4: Aggregate Effects of treatment conditions
-.05 0 .05 .1
Portugal
Spain
UK
Germany
Non-mainstream parties
R cuts Both cut
-.02 0 .02 .04
Portugal
Spain
UK
Germany
Abstention
R cuts Both cut
-.2 -.1 0 .1 .2
Portugal
Spain
UK
Germany
L-R polarization
R cuts Both cut
Note: Non-mainstream vote share is the difference in the proportion of respon-
dents voting for non-mainstream parties as defined in the previous sections. Ab-
stention measured as the proportion of non-voters in each treatment condition.
Left-right polarization measured as the weighted standard deviation of left-right
positions (as provided by the Parlgov database).
Overall, the aggregated effects from the experimental analysis are consistent with
the findings from our macro analyses and confirm that economic policy-making, and
in particular fiscal consolidation, has a significant impact on the party landscape in
representative democracies.
6 Conclusion
In this paper, we find that political polarization increases after mainstream political par-
ties implemented austerity. This is the case because dissatisfied voters who do not find a
credible anti-austerity alternative among mainstream parties turn towards smaller, often
more radical parties. Fiscal austerity, therefore, has important political consequences
even if austerity does not lead to government breakdown (Arias and Stasavage, 2019).
Governments may convince a large fraction of voters that austerity is necessary (Barnes
29
and Hicks, 2018) and build a majority of voters who support fiscal adjustments (Bansak,
Bechtel and Margalit, 2021). But austerity still reshuffles votes within the party system
towards non-mainstream parties, which consolidates their political standing over time
(Bischof and Wagner, 2019).
These results have important consequences for our understanding of the impact of
fiscal policy. Most existing work has examined how economic conditions, such as finan-
cial crises or trade shocks, which are partially beyond the control of governments, affect
parties. We highlight instead how the policy choices made by the key political parties
affect the stability of the party system. Greater polarization, in turn, inhibits the ability
to build viable and stable coalition governments and leads to more difficulties in putting
together a coherent government policy agenda, ultimately increasing political instability
and policy gridlock (Konstantinidis, Matakos and Mutlu-Eren, 2019). Ironically, these
political effects then undermine the effectiveness of fiscal institutions that aim at limiting
public spending and keeping fiscal deficits low (Wehner, 2010).
Our findings raise a number of follow-up questions for future research. Our argument
rests on assumptions about the reasoning of voters when they choose non-mainstream
parties in response to austerity that we cannot test in this paper. There are multiple
mechanisms that lead to the results that we found. For instance, voters can select non-
mainstream parties because they like their economic policy positions, because they hope
to induce a policy change of center parties, or simply for reasons of protest without clear
expectations how their vote would change economic policy. It is important to understand
the motivations of voters better, how they perceive the economic positions of mainstream
and non-mainstream parties, how important the economic dimension is for their vote
choice, and how they think the rise of a radical party would influence policy.
30
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