Voters in many European countries – including Austria, Belgium, Denmark, France, the Netherlands, Norway, and Switzerland – have recently expressed strong support for extreme right-wing parties. This is new. From the 1970s until the mid-1980s, hardly any extreme right-wing party had gained more than 5% in a general election. Fifteen years later, some extreme right-wing parties in the aforementioned countries received between 10% and 25% of the votes.
History reminds us that the flourishing of extreme parties within a democratic environment can put democracy itself at risk. As a particularly striking example, the Nazis did not come to power through a coup but through regular elections. Understanding the drivers of recent developments is, therefore, of utmost importance.
Correlation between immigration and extreme right-wing voting
Another empirical fact is also noteworthy: there is an alarmingly high cross-country correlation between the election success of extreme right-wing parties and immigration. Figure 1 below (accounting for country fixed effects) suggests a correlation of 0.48 between the share of immigrants and the extreme right-wing vote share. This correlation is suggestive. However, researchers and policymakers are particularly interested in understanding whether immigration actually causes extreme right-wing voting.
Figure 1. Share of votes for extreme-right-wing (ERW) parties
Why geographic proximity of immigrants and natives matters
A natural starting point for understanding voting decisions is the hypothesis that rational and self-interested individuals vote for the party that promises them the greatest utility (Downs 1957). Extreme right-wing parties present anti-immigration platforms. Voters who lose from immigration should, therefore, favour extreme right-wing parties in elections. Theories of economic interest (Lipset 1963) suggest that wage, price, and employment effects should be decisive. Basic economic theory suggests that immigration hurts those native people who supply production factors that are close substitutes for factors supplied by immigrant workers. In contrast, people who supply complementary factors will gain from immigration. Or, anti-immigration sentiments based on self-interest are related to school quality and neighbourhood quality. Card et al. (2012), for instance, find that the natives' assessments of 'compositional amenities' that they derive from their neighbourhoods, schools, and workplaces are an important source of anti-immigration sentiments.
The conjecture in our paper (Halla et al. 2012) is that the natives' voting decisions depend on the skill levels of immigrants either because the intensity of competition for jobs varies across skill levels or because the native population perceives adverse effects on compositional amenities when the immigrants are primarily low- and medium-skilled. For either channel to work, a certain geographic proximity of immigrants and natives is required. Therefore, we explore one potentially important channel through which immigrants may drive support for extreme right-wing parties: the presence of immigrants (with certain skill levels) in the voters' neighbourhoods.
The Austrian case: Jörg Haider and the Freedom Party of Austria
We study the case of the Freedom Party of Austria (FPÖ). Under the leadership of Jörg Haider, this party increased its share of votes from less than 5% in the early 1980s to 27% by the year 1999. When Jörg Haider became the party leader in 1986 the nationalists within the party, favouring an anti-immigration stance, prevailed over its business-friendly, libertarian wing. After this change, the FPÖ steadily increased its vote share; the nationalistic approach has characterised the party's platform ever since.
Endogenous sorting of immigrants
To test the hypothesis that voters in Austrian communities with a higher share of immigrants (residents without Austrian citizenship) are more likely to vote for the FPÖ, we employ complete, detailed census data, allowing us to sidestep problems of measurement error. Our analysis takes into account the fact that the immigrant share in a given community is not exogenous. An immigrant's decision as to where to settle is likely to be influenced by the extent of cultural or racial prejudices in a community. Immigrants would rarely settle in communities with a high degree of overt anti-immigrant sentiments, since it would be more difficult to find housing and a job there. Thus, unobserved xenophobia is an omitted variable, leading to a downward bias in a naïve estimation of the effect of the immigrant share on FPÖ vote shares.
Fortunately, the recent history of immigration into Austria offers features that allow us to identify econometrically the effect of the local presence of immigrants on election outcomes via an instrumental variable (IV) approach. We use historical settlement patterns of immigrants (prior to 1971) as an IV for the geographic distribution of the immigrant population in later years. This approach is based on the notions that:
- existing social networks are important elements in the settlement choices of current immigrants, and that
- the determinants of the historical settlement patterns are arguably uncorrelated with recent (unobserved) factors of voting behaviour.
We find strong evidence supporting the first assumption. The second and identifying assumption is not testable. However, we argue that historical settlement patterns form a valid instrument in the Austrian case.
Historical settlement of immigrants in Austria
To understand why historical settlement patterns can serve as a valid instrument, it is important to recall the situation of the Austrian economy in the 1950s and 1960s. The post-war boom of the Austrian economy led to a growing demand for labour amid increasing labour shortages. In the 1960s, the Austrian government began to forge bilateral agreements with southern and south-eastern European states to recruit temporary workers. Recruitment offices in those countries were established, and an influx of (mainly) Turkish and Yugoslav workers and their families to Austria began. These arriving immigrants arriving were greeted enthusiastically. The zeitgeist is captured neatly by the way the first foreign workers arriving in Vienna from Turkey in 1964 were welcomed. Turkish workers were received with cheers of approval and enthusiasm from a large gathering in the Viennese train station. A marching band played in their honour and officials handed out flowers to them (Wiener Zeitung, 2006/12/30). That means that settlement patterns prior to 1971 were not driven by anti-immigrant sentiments.
In later decades the very positive image of immigration started to change. Nevertheless, further waves of immigration (in the 1980s and in the 1990s) took place. As the figures above indicates, later immigrants settled where they found existing social networks and neighbours with the same cultural and linguistic background (provided by earlier temporary workers who eventually stayed). Such networks facilitate the job search and assimilation into the new culture (Bartel 1989). This settlement pattern creates the special correlation between historical settlement patterns and the geographic distribution of immigrant population in later years.
The impact of immigration on the success of extreme right-wing parties
As hypothesised, the presence of immigrants in their neighborhoods has a quantitatively important and statistically significant impact on citizens' voting patterns. Our baseline IV estimate suggests that a one-percentage-point increase in the share of immigrants in a community increases the percentage of FPÖ votes in general elections by about 0.4 percentage points. This implies that a one-standard-deviation increase in the share of immigrants leads to a quarter of a one-standard-deviation increase in the FPÖ vote share. We also find that the increase in the share of immigrants had a positive effect on the increase in the vote share of the FPÖ. The increase in immigration helps to explain an important part of the rise in support for the extreme right over time.
The importance of the immigrants’ skill composition
Our results further show that the skill composition of immigrants affects voting decisions. We find that the proximity of low- and medium-skilled immigrants causes Austrian voters to turn to the far right. By contrast, high-skilled immigration either has an insignificant or a negative effect on FPÖ votes. This is consistent with the hypothesis that voters vote in their economic interest: high-skilled immigrants improve living conditions for the native population; lower-skilled immigrants pose the greatest threat of labour-market competition. This result is also consistent with the idea that Austrians worry about adverse effects of immigration on the compositional amenities that natives derive from their neighbourhoods, schools, and workplaces. Such effects can be expected to play a larger role with low- and medium-skilled immigration than with high-skilled immigration.
It is a simple fact that immigration is necessary for developed countries, given demographic developments such as a persistently low fertility rate and the aging of society. However, immigration also has potentially critical political implications, including the possible rise of extreme right-wing parties. Several channels are likely to exist through which immigration may affect voting decisions, and each channel requires different policy responses. The geographic proximity of immigrants is one important causal driver behind the support for the far right. The evidence suggests that policies at the local level deserve significant attention. For example, it is possible that integration policies in the community may help restrict emerging xenophobia. Future work is needed to understand which specific policies are particularly suitable.
Bartel, AP (1989), “Where Do the New United States Immigrants Live?”, Journal of Labor Economics, 7(4):371-391.
Card, D, C Dustmann, and I Preston (2012), “Immigration, Wages, and Compositional Amenities”, Journal of the European Economic Association, 10(1):78-119.
Downs, A (1957), An Economic Theory of Democracy, Harper and Row.
Halla, M, AF Wagner, and J Zweimüller (2012), "Does Immigration Into Their Neighborhoods Incline Voters Toward the Extreme Right? The Case of the Freedom Party of Austria", CEPR Discussion Papers 9102.
Lipset, SM (1963), Political Man: The Social Basis of Politics, Anchor Books.
Peri, G and C Sparber (2011), “Assessing Inherent Model Bias: An Application to Native Displacement in Response to Immigration”, Journal of Urban Economics, 69(1):82-91.