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Paolo Fornaro, Antti Kaihovaara

Microdynamics, granularity and populism: The Finnish case


We study how measures of microdynamics such as job and worker flows, the job reallocation rate and the labor market churning rate are related to populism support. Moreover, we investigate the relation between employment shocks to large firms, granular shocks, and populism. To measure populism, we look at the municipal-level support toward the Finns Party, the Finnish right-wing populist party, during the 2011 and 2015 parliamentary elections. We find that the labor market churning rate and the granular shocks are negatively associated with support for populism. Hirings in continuing establishments are negatively correlated with populism, while hirings due to the entry of new establishments and the job reallocation rate are positively related with populism, a possible consequence of economic restructuring. We complete our analysis by looking at the link between local labor market conditions and the supply of populist candidates, and by examining the usefulness of microdynamics indicators in a predictive setting.