Regional Inequality and European Fiscal Integration in Times of Crisis. How Regional Wealth and Covid-19 Impact Shape Public Support for EU Risk Sharing

While the economic collapse prompted by the Covid-19 pandemic and culminating in the largest European fiscal stimulus package to date has revived the public debate on European fiscal integration policies, citizens’ opinions towards such policies remain to be fully explored. Particularly, the effect of subnational regional contexts is currently understudied. We add to this lacuna by joining regional level indicators with data from a conjoint survey experiment assessing European citizens’ preferences towards multidimensional fiscal capacity instruments in 5 European countries (DE, ES, FR, IT, NL; 8570 respondents, 87 regions). We exploit the fact that the conjoint experiment was fielded in a unique point in time, namely amidst the height of the Covid-19 pandemic’s first wave in Europe, to test whether early differences in regional infection rates impact European fiscal policy preferences. We find that regional level self-interest plays a significant role in moderating individual preferences. Citizens in poorer regions and in regions struck more heavily by the Covid-19 pandemic are more supportive of European fiscal integration policies if they are intended to be redistributive, if they increase taxation of the rich, if they refrain from budgetary conditions, and if they withhold automatic termination and fines in case of non-compliance. Furthermore, in wealthier regions, the positive effect of high incidence rates on support for packages that impose termination and fines in case of non-compliance increases. Hence, when formulating political opinions regarding European fiscal integration, people prefer what is best for their region while also considering the impact of the pandemic. Co-authored by Lukas Hetzer (GESIS), Francesco Nicoli (Ghent University), Brian Burgoon (University of Amsterdam), & Roel Beetsma (University of Amsterdam).