Economic Policy Voting and Incumbency: Unemployment in Western Europe

Abstract

The economic voting literature has been dominated by the incumbency-oriented hypothesis, where voters reward or punish government at the ballot box according to economic performance. The alternative, policy-oriented hypothesis, where voters favor parties closest to their issue position, has been neglected in this literature. We explore policy voting with respect to an archetypal economic policy issue – unemployment. Voters who favor lower unemployment should tend to vote for left parties, since they “own” the issue. Examining a large time-series cross-sectional (TSCS) pool of Western European nations, we find some evidence for economic policy voting. However, it exists in a form conditioned by incumbency. According to varied tests, left incumbents actually experience a net electoral cost, if the unemployment rate climbs under their regime. Incumbency, then, serves to break any natural economic policy advantage that might accrue to the left due to the unemployment issue.