Inequality Aversion, Populism, and the Backlash Against Globalization
Lubos Pastor () and
No 13107, CEPR Discussion Papers from C.E.P.R. Discussion Papers
Motivated by the recent rise of populism in western democracies, we develop a model in which a populist backlash emerges endogenously in a growing economy. In the model, voters dislike inequality, especially the high consumption of ``elites." Economic growth exacerbates inequality due to heterogeneity in risk aversion. In response to rising inequality, rich-country voters optimally elect a populist promising to end globalization. Countries with more inequality, higher financial development, and current account deficits are more vulnerable to populism, both in the model and in the data. Evidence on who voted for Brexit and Trump in 2016 also supports the model.
Keywords: Brexit; Globalization; inequality; populism; risk aversion; Trump (search for similar items in EconPapers)
JEL-codes: D72 F65 G11 G12 G18 P16 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-pke and nep-pol
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Working Paper: Inequality Aversion, Populism, and the Backlash Against Globalization (2018)
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