The Mutual Influence of Labour Market Polarisation, Wage Polarisation and Political Polarisation in the European Union

Abstract

The aim of the paper is to prove a hypothesis concerning the dependence of the political polarisation of the European Union on recent developments in labour market structure. The labour market is undergoing changes that stem from technological progress as well as outsourcing of low-skill activities, which are causing an increase in labour market and wage polarisation. The premise is that the depopulation of the middle class is increasing political polarisation. The hypothesis is tested on a sample of 27 European Union countries from 1990 to the present using OLS with fixed effects regression analysis. Political polarization is represented by an own constructed political polarization index based on the ideological division of political parties’ data of the ParlGov project (2022). The index is constructed by combining the election results and four ideological spectrums. In conclusion, the dependence of political polarisation on labour market polarisation and wage polarisation is rejected.