Seminar by Sascha Becker

SALA SEMINARI – I° PIANO, PALAZZO LEVI CASES, VIA DEL SANTO 33 - ORE 12.30

06.06.2018

Seminar by Sascha Becker, University of Warwick

Title: Austerity and Brexit (joint with Thiemo Fetzer)

Abstract: A recent literature uses the exposure to Chinese import competition to proxy for globalization exposure to explain the rise of extreme voting in the UK, the  US and other European countries. The literature suggests that fiscal policy is required to accommodate globalization losers. This paper highlights that the rise of voting for the UK Independence Party (UKIP), as the single most important correlate of the subsequent Leave vote in the EU referendum, is strongly associated with the withdrawal of the welfare state since 2010.We document in a robust panel setup that exposure to austerity at the district, constituency and individual level is associated with a significant rise in electoral support for UKIP. The timing suggest that this effect is only present from 2011 ons.wards, which coincides with the incidence of the austerity measures. While our results do not preclude that the EU referendum outcome was due to import competition, the timing suggests that the withdrawal of welfare benefits which may have mostly targeted individuals most vulnerable to globalization, seems to be at the heart of the change in political sentiment.