Societal Unease: an Economic Problem?

This paper investigates how changes in income and job loss affect the societal unease that underlies developments like the rise of populist parties or the ‘gilets jaunes’ protests. Using LISS panel data for Dutch individuals between 2008 and 2017, this paper uniquely exploits variation in unease within Dutch individuals over time. It finds that job loss has a substantial effect on societal unease, while changes in income are unrelated, indicating that the anti-cyclical nature of societal unease results from the status or meaning found in a job. Furthermore, this paper considers behavioral scientific theories and finds that there is loss aversion in gaining and acquiring a job. Moreover, financial expectations have little effect on societal unease – contrary to life satisfaction. Additionally, this paper compares the influence of economic factors to that of cultural factors related to immigration and cultural protectionism. While economic factors are important determinants of societal unease, cultural factors appear to be more consequential.