Labor Market Conditions and Partisan Voting: How Unemployment Hurts the Left

Abstract

Fluctuations in the labor market are a natural part of the business cycle, and they have attracted attention from political scientists for decades. Some scholars argue that left-wing parties benefit from rising rates of unemployment while others claim that voters rally behind conservative parties when the labor market weakens. I argue that the heterogeneous response of voters to a rise in the unemployment rate is due to differences in asset wealth. Put simply, the well-off have less need for social insurance, so they vote for conservative parties in order to put a cap on social spending when the unemployment rate rises; by contrast, asset-less voter opt for the left, with an eye to preserving their entitlements. I show with panel data from Swedish electoral districts that left-wing parties gain an electoral advantage when the local unemployment rate rises in less well-off areas, but they lose support when unemployment rises in wealthier districts.