The Italian legislative election of March 4 had two clear winners: the League and the Five Star Movement. These two parties share euroskeptical views, favor draconian restrictions to immigration and are largely perceived as anti-establishment forces. Taken together, they won about 50 percent of the votes cast. Many interpret this as a populist triumph akin to Brexit and to Trump’s election, driven by economic distress.
But that explanation might obfuscate the social and economic dynamics underlying the results. The two winning parties certainly share an anti-elite populist rhetoric. Beyond this superficial similarity, though, their economic policy platforms are radically different and target very different kinds of economic distress. The League’s platform is conservative in economic matters, advocating much lower taxes on personal income and protectionist measures against global trade; the Five Star Movement wants to increase public spending and start a new program that awards generous benefits to the unemployed and to low-income workers.
Our analysis reveals that the League is supported by discontented voters in industrialized areas, where well-paid, secure manufacturing jobs are increasingly harder to find because of global competition and automation. By contrast, the Five Star Movement is supported by frustrated voters in Italy’s poorer regions, which always depended more on government spending and have been further left behind by the austerity policies of recent years.
Here’s how we did our research
Many observers trying to understand the global populist wave believe it grows from how dramatically international trade and expanding technology have reshuffled the economic landscape, producing winners and losers — leading to inequality and discontent. We wanted to see how these factors might have influenced the Italian election. For each region, we computed how much its workforce had been affected by competition from Chinese imports and by automation.
To measure how much a region was affected by import competition, we followed earlier work that we’ve published here at Monkey Cage. The idea is that import competition created more disruption in regions where, traditionally, more people worked in industries in which Chinese imports have increased the most, such as textiles and electronics.
We measured the number of people in each region that were employed in each industry in 1988, before China’s manufacturing began leading world trade. We then considered how much Chinese imports to Italy increased in each sector between 1989 and 2007. These are the years in which Chinese imports grew the most, in Italy as well as in other western European countries.
We measured how much a region’s workforce was affected by automation in a similar way. We examined data on the adoption of robots by Italian manufacturing firms in each sector, from 2014 to 2016, sourced from the International Federation of Robotics. Economists Daron Acemoglu and Pascual Restrepo used the same approach to document how much automation affected local employment and wages across U.S. labor markets.
Regions whose job markets were hit by Chinese imports and automation supported the League
We found that the more a region’s employment was affected by Chinese imports and automation, the more that region’s voters supported the League. In other words, in historically industrialized and prosperous areas of Italy — mainly concentrated in the north and the center — voters supported the League when they saw trade and technology resulting in economic decline and increasing inequality. Neither factor, however, led to more votes for the Five Star Movement.
So what about the League’s platform appealed to these regions? It promised protectionist measures against Chinese imports, a “robot tax” that would make automation less attractive to business and a flat 15 percent income tax, which would result in cutting workers’ personal income taxes on average by half.
That combination of isolationism and tax cuts is the classic winning formula of the radical right. And our findings here are quite similar to what we’ve found in our research on about 200 regions in 14 countries across Western Europe. From Portugal to Finland and from Ireland to Austria, we found that the loss of well-paid, secure jobs caused by competition with cheap imports and by automation in manufacturing tilts voters toward nationalist and radical-right parties.
But regions with longtime poverty and long-term unemployment supported the Five Star Movement
By contrast, the Five Star Movement found its voters in the south of Italy, including Sicily and Sardinia. These are the least industrialized regions of the country, where automation and global competition have had far fewer consequences.
Italy’s southern regions have historically had lower per-capita income and higher unemployment than the rest of the country. After the European fiscal crisis of the early 2010s, Italy’s government enacted austerity policies to reassure international investors that the country was creditworthy. Spending cuts especially hurt southern Italy, which relies more on public sector jobs and services. The result: a still wider economic gap between these regions and the rest of Italy.
To measure this, we computed the share of total workers employed in the public sector in each region in 2008, before the debt crisis and the resulting austerity measures. Sure enough, we found a strong and statistically significant association between public employment and support for the Five Star Movement, which advocates for discarding the hiring freeze in the public sector that was part of the austerity policies.
Here’s what else was associated with more votes for the Five Star Movement: a higher percentage of people between 18 and 29 who were neither employed nor actively looking for a job. This measure includes what economists call “discouraged workers,” young people who just gave up hope that they’d find jobs.
The Five Star Movement promised a very generous universal basic income — which unemployed voters in poorer regions might find particularly attractive.
So what, if anything, do these two parties’ platforms have in common? They would be very costly for the public purse — in one case, by cutting government revenue; in another, by increasing government expenses. Other than that, the impulse to summarize the Italian election’s outcome as “populist” is a bit facile. The two parties offer very different prescriptions to solve very different problems.
Massimo Anelli is assistant professor of economics at Bocconi University.
Italo Colantone is assistant professor of economics at Bocconi University.
Massimo Pulejo is a research fellow at Bocconi University.
Piero Stanig is assistant professor of political science at Bocconi University.