Corruption and partisan polarization: evidence from the European Union

Abstract

AbstractRecent work documents that even though partisan polarization may have detrimental economic and social outcomes, polarized societies lead to better governance and less corruption. However, the effect of corruption on partisan polarization has been mostly ignored by the literature. By using various measures of partisan polarization and corruption, this paper demonstrates that corrupt behaviours are associated with more partisan polarization in the European Union, indicating that a stronger presence of corruption leads to higher partisan polarization. The findings are robust to the use of different polarization measures, methodologies, and a battery of control variables. This paper’s main finding, increased corruption leading to increased partisan polarization, provides another important mechanism beyond the standard socio-economic factors that led to the current rise in support of parties opposing to European Union and rise of populist parties in European Union. Polarized societies tend to generate inefficient economic outcomes and the alleviation of corruption could improve economic outcomes by decreasing partisan polarization.