What are the long-term political consequences of economic crises? We assess the enduring impact of the Great Recession on U.S. political outcomes. We employ a difference-in-differences approach, leveraging geographic variation in unemployment shocks. Contrary to claims that major recessions primarily boost anti-incumbent, far-right candidates, we find that counties more severely affected by the recession experienced a sustained increase in Democratic vote shares, particularly in Congressional elections. These effects persisted for at least 10 years. We demonstrate that these results are unlikely to be due to persistent economic decline, demographic changes, shifts in candidate ideology, or fiscal compensation spending. Instead, survey evidence suggests that the recession lowered expectations for upward mobility, likely increasing support for redistribution and thereby benefiting Democratic candidates. Our findings expand the literature by showing that (i) severe economic shocks do not necessarily favor right-wing populists, and (ii) major downturns can continue to influence electoral outcomes long after direct economic consequences have subsided.
No prior registration necessary. If you have any questions, please contact Amanda Slater at slater[at]hertie-school[dot]org.
This event is part of the Political Economy Lunch Seminar series.