Economic Recovery Strengthens Public Support for the Euro
By Felix Roth (University of Hamburg)
The long-term sustainability of the euro depends heavily on its ability to attract widespread public support. This is one of the main conclusions I and my co-authors reach in our most recent academic work in this field, which draws its evidence from a uniquely large Eurobarometer database and applies the latest econometric techniques. This blog highlights our most salient findings and underscores their relevance in the current policy context.
The figure below demonstrates that the euro, with few exceptions, has enjoyed support by a majority of citizens in each of the 19 euro area (EA) member states since its introduction in 1999 through to 2017. This observation also holds for the largest EA economies, such as Germany and Italy.
Net support for the euro in the EA-19, 1999-2017
The macro-econometric results we report in our journal article indicate that the unemployment recovery in the EA19 has strongly contributed to an increase in public support for the euro: in times of recovery, a 1-percentage point decline in unemployment was associated with a 3-percentage point increase in public support for the euro.
The micro-econometric results of our journal article show that education accounts for the largest effect on support for the euro. The probability that highly educated respondents will express support for the euro is around 18 percentage points higher than for those with lower education.
How do our results compare to previous findings? In the first instance, our results differ starkly from those of scholars who claim to have found minority support in Italy (Guiso et al., 2016, p. 292) and Germany (Stiglitz, 2016, p. 314). These claims, however, are not based on Eurobarometer data, which has come to be considered the most reliable source for measuring public support for the euro. Secondly, our macro-econometric results support the previous research by Roth et al. (2016, p. 953), which reports a negative relationship between unemployment and support for the euro in times of crisis. And finally, most of our micro-econometric results during economic recovery are similar to those from the pre-crisis period as reported by Banducci et al. (2009, p. 576).
The results of our article have a direct bearing on the policy context, as the single currency enters its third decade. First, the strong public support shown for the euro today should help shield it against populist attempts at the national level to dismantle it. Second, it grants political legitimacy to the newly elected presidents of the European Central Bank and the European Commission to continue to do “whatever it takes” if the euro faces a crisis in the future.
Please note that this contribution represents the views of the author and should not be attributed to Ideas on Europe, JCMS or UACES.
Since 2017, Felix Roth has been a Senior Research Fellow in the Department of Economics at the University of Hamburg, where he is finalizing his German Habilitation in economics.
His academic research is focused on the relationship between intangible capital and productivity growth, as well as on the determinants of public support for the euro. He has published widely in academic journals, including the Journal of Common Market Studies, Review of Income and Wealth, Kyklos and Journal of European Integration, and is the author of several monographs and contributions to collected volumes