Perspectives on the Economy. Competence Signals and Economic Voting in EP Elections

Our paper explores how voters make sense of economic developments so as to infer competence signals for parties competing in the European Parliament elections. In theoretical terms, the paper focuses on a forward-looking selection model and probes the difficulties and conditionalities of signal extraction in the multilevel context of European Union politics. In empirical terms, we apply the well-established literature on economic voting to the analysis of European Parliament elections in 2004, 2009, and 2010. Our analysis utilizes the rich data at hand so as to address pressing endogeneity concerns in electoral research: individual-specific assessments of the economy are often themselves shaped by partisanship so that, for instance, upporters of parties in government tend to evaluate the state of the economy more favourably than supporters of opposition parties. Our results show that, although the EU has acquired significant economic policy domains from the Member States, and therewith effectively blurs political responsibility for economic policies, empirical findings demonstrate that voters are nevertheless able to extract meaningful competence signals and cast an economic vote.