Investigation of the interplay between globalization, inequality and populism across Europe (EUFIRST)

The prevalence of economic uncertainty and rising inequality historically fuels discontent and mistrust towards democratic institutions. Populist leaders capitalise on such sentiments by stoking resentment among disorganised followers. They frame their rhetoric around the idea that the people possess high ethical and moral values, contrasting them with a corrupt ruling class. This creates a division between the virtuous population they claim to represent and the self-serving elite.

In theory, a certain dose of populism could prove beneficial for government institutions. In practice, what we have learnt from populist episodes is quite the opposite, in terms of both institutional changes and economic performance. The EUFIRST project demonstrates the devastating consequences of populism on macroeconomic outcomes at the country level and on the quality of bureaucracy at the municipality level.

In EUFIRST, we also examine the evolution of populism in industrialised countries since the early sixties and shed light on the intricate relationship between immigration flows and populism. Going beyond conventional measures of populism, we assign a continuous populism score to all political parties based on their platforms. This allows us to measure the overall exposure of voters to populist ideas after each election. Our index reveals that populism has reached an all-time peak. In particular, the ongoing surge of right-wing populism in Europe is alarming.

Using cross-country data and country case studies, the EUFIRST team empirically showed that both level of populism and populist responses to various crises are determined by the average education level of voters, as well as by the size and skill structure of immigration. Specifically, low-skilled immigration tends to shift votes from left-wing to right-wing populist parties. Conversely, high-skilled immigration tends to reduce all forms of populism. We also study the role of residential segregation of immigrant and native populations.

Turning the question around, we also evidence an impact of populism on the skill structure of immigration and emigration flows. Our findings indicate that exposure to populist attitudes and politics reduces the attractiveness of countries and municipalities with populist leaders, inducing larger population outflows, particularly among young and highly educated natives. This also results in a decrease in the average education level of immigrants.

Identifying causal relationships between populism and mobility decisions is challenging. However, our research incorporates various approaches to tackle this problem. Given the self-reinforcing mechanisms we have identified, the upward trend in populism is alarming and exhibits snowball dynamics. This underscores the need for concrete actions to restore trust in mainstream parties and strengthen local and European institutions.

EUFIRST involves Francesco Andreolli, Etienne Bacher, Frédéric Docquier, Adam Levai, Hillel Rapoport, Eugenio Peluso and Bertrand Verheyden. In this project, LISER partners with scholars from Universities in Louvain-la-Neuve, Salerno, Barcelona, Milan, Bangor, Alicante and Verona.