The Effects of Economic Shocks on New Party Emergence and Changes in Voting Patterns

This paper analyses the effects of an economic shock on the emergence of new parties and other changes in voting parties by using regional variation in the exposure to the shock. I find that a worsening of economic conditions as measured by the unemployment rate leads to an increase in electoral competition and volatility. In particular, the deeper the effects of the recession in an area, the larger the number of new parties emerge and become more successful and there is an increase in the changes in vote shares. On the other hand, the vote share of parties previously in government decreases, and a decrease in vote share concentration.