Does Austerity Cause Polarisation?

Most party systems have seen a rise in political polarization and populism during the past decades. This paper shows that austerity policies significantly contributed to this development. Our analysis of 170 elections since 1980 finds that austerity, political polarization and the rise of populism are strongly related, especially if a left government implemented austerity policies. Survey experiments with a total of 8'800 respondents in the Germany, Portugal, Spain and the United Kingdom show why this is the case: If a right-wing government implements austerity, voters dissatisfied with government policies mostly turn to the main opposition party on the left. In cases where a left-wing government implements austerity, however, dissatisfied voters turn towards non-mainstream, populist parties or abstain from voting because the main, traditional opposition party on the right does not provide a credible anti-austerity alternative. Our paper offers two key insights: 1) Diverging electoral preferences on the classical economic left-right dimension still significantly shape the political landscape in Western democracies. 2) Government partisanship matters because the alternative parties voters resort to differ under left and right governments. Overall, austerity can have profound and lasting effects on party systems as it tends to strengthen parties at the fringes of the ideological spectrum and gives rise to populist challenger parties. (the paper would best fit into the panel `The Political Economy of Populism", organized by Tim Vlandas)