Together We Stand, Divided We Fall: Political Polarisation and Income Inequality in the EU and the UK

Dionysia Rallatou, Michail Tsagris () and Vangelis Tzouvelekas ()
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Vangelis Tzouvelekas: Department of Economics, University of Crete, Greece

No 2501, Working Papers from University of Crete, Department of Economics

Abstract: This paper investigates the link between political polarisation and inequality in Europe from 1989 to 2024. Using Bayesian Aldrich-McKelvey scaling, the DER polarisation index, and Araar decomposition, it traces polarisation's regional and structural foundations. Results show that polarisation has risen steadily, with Mediterranean and Central/Eastern Europe consistently more polarised than Western and Northern regions. Araar decomposition reveals that polarisation stems mainly from between-group alienation, not within-group identification. Divides over EU membership, class, and urban-rural residence account for much of the increase, with radical groups contributing disproportionately. Fixed-effects regressions confirm that inequality is the strongest determinant of polarisation: higher Gini values consistently predict greater antagonism. Economic growth reduces polarisation only under egalitarian conditions; when coupled with inequality, it amplifies divides. These findings highlight

Keywords: political polarisation; inequality; EU; economic growth; affective polarisation (search for similar items in EconPapers)
JEL-codes: C23 C38 D31 D72 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2025-09-26
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