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Why far right parties do well at times of crisis: the role of labour market institutions

Vlandas, Tim, Halikiopoulou, Daphne, (2016), “Why far right parties do well at times of crisis: the role of labour market institutions”, European Trade Union Institute, Ιούλιος

The far right is on the rise in many western and eastern European countries. The 2008 Eurozone crisis is an obvious source of blame for this phenomenon; indeed, a large body of literature suggests that economic malaise prompts support for far right parties. This conventional wisdom, however, is not consistent with cross-national patterns of unemployment and far right votes in the last three European Parliament (EP) elections. To solve this puzzle, we argue that it is specific labour market policies rather than the economic crisis itself that are more likely to facilitate the rise of the far right. In many countries over the past three decades, governments have deregulated employment protection legislation (EPL) and reduced unemployment benefits; but it was precisely these labour market institutions that offered protection from the insecurity and deprivation that economic malaise imposes on societies. We test our hypothesis on the last three EP elections and find that unemployment and GDP growth have not played a role in far right support, while labour market institutions have had an impact that is both direct and indirect, by limiting the effect of unemployment. Studying unemployment benefits also revealed a similar phenomenon of direct and indirect correlation: where unemployment benefits are generous, unemployment has no association with the far right, but where they are not, unemployment correlates with higher far right support. Employment protection legislation has only an indirect association that is conditional on unemployment benefits. Where unemployment benefits are low, EPL mediates the impact of unemployment, but where unemployment benefits are generous, there is no mediating impact of EPL. This suggests that the policies of austerity are likely to intensify support for the far right in EP
elections, therefore undermining the European integration project itself.

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