The economic foundations of democratic legitimacy: Exploring the relationship of macroeconomic inequality and trust in democratic institutions in Europe

Abstract

We use survey data from the European Social Survey to explore the implications of changing macroeconomic inequality for citizen’s trust in the main institution of democratic governance. We extend existing research on the role of economic inequality by examining an expansive set of indicators to capture increasing economic polarisation and we employ hybrid multilevel regression models to distinguish genuinely sociotropic effects of changing macroeconomic inequality from egocentric effects of citizens’ personal socio-economic status. We empirically confirm the influence of macroeconomic fundamentals, and find that after controlling for material prosperity and unemployment rates, the inequality of market incomes is the primary factor to create repercussions at the level of the basic democratic order of societies. Many other dimensions of economic inequality, from the degree of public redistribution to rising poverty levels and rising top income shares, may all constitute relevant policy issues and may relate to shifting party systems as well as shifting voter allegiances, but do not eventually call democratic fundamentals into question. Our analyses thus vindicate conjunctions from the modern classics of political sociology that have been seeing societal prosperity among the necessary conditions for sustaining democratic governance.