Paper
Monday, April 22nd
Søren Frank Etzerodt (Technical University of Munich)
Abstract:
How does globalization-induced industrial decline impact politics? I propose different mechanisms linking job decline to voting. First, if unemployment soars as a consequence of a plant closure this will result in local communities being economically deprived which leads to lower support for the incumbent. Second, blame attribution should also play an important role since incumbents can be blamed for their handling of plant closures. Third, I argue that if people are effectively compensated via active labor market policies this anti-incumbent effect should be minimized. I leverage the case of the closing of Lindø Steel Shipyard in Denmark to test in a quasi-experimental setting how a plant closure is linked to voting. Leveraging a differences-in-difference (DiD) design with national and local election data at the municipality level from 2001-2019, I first find that the closing of the shipyard had a negative effect on votes for the right incumbent government. I further find that the closures increased unemployment in the short to medium term, and unemployment decreased votes for the incumbent. Moreover, leveraging interview data I showcase that local actors blame the government for its inaction and instead credit the EU for its support. Supporting this, DiD estimates also show that impacted areas develop more positive views of the EU. Finally, leveraging an event study design I find that the political effects are not persistent. Three elections after the announcement of the closing in 2009 the effects become insignificant which at least suggests that the compensation could have been effective. I find no evidence of a surge in the populist vote or a systematic anti-incumbent effect as new incumbents are not punished. The paper hence shows how plant closures are related to voting, and how losers of globalization can be compensated.
Moderator: Elisa Navarra (Universite libre de Bruxelles)