The European trust crisis and the rise of populism Yann Algan, Sergei Guriev, Elias Papaioannou and Evgenia Passari Abstract We study the implications of the Great Recession on voting for anti-establishment parties, as well as for general trust and political attitudes, using regional data across Europe. We find a strong relationship between increases in unemployment and voting for non-mainstream, especially populist, parties. Moreover, increases in unemployment go in tandem with a decline in trust in national and European political institutions, while we find only weak or no effects of unemployment on interpersonal trust. The correlation between unemployment and attitudes towards immigrants is muted, especially for their cultural impact. To advance on causality, we extract the component of increases in unemployment explained by the pre-crisis structure of the economy, in particular the share of construction in regional value added, which is strongly related both to the build-up and the end of the crisis. Our results imply that crisis-driven economic insecurity is a substantial driver of populism and political distrust. Contact details: Sergei Guriev: EBRD, One Exchange Square, EC2A 2JN, London, UK. Email:
[email protected]. Yann Algan is the Dean of the School of Public Affairs and Professor of Economics at Sciences Po and affiliated with CEPR. Sergei Guriev is Chief Economist at the European Bank for Reconstruction and Development, Professor of Economics at Sciences Po and Research Fellow at CEPR. Elias Papaioannou is Professor of Economics at the London Business School and a Research Affiliate at CEPR. Evgenia Passari is Assistant Professor at Université Paris-Dauphine.