Economic Insecurity Increases Affective Polarization and Outgroup-Aversion

Political polarization -- the deepening divide between opposing social and political groups -- has become a pressing global challenge, often disrupting democratic governance. While some polarization is expected in politics, the factors driving extreme divisions remain unclear. Economic instability is frequently linked to rising polarization, but causal evidence is limited. Using panel survey data from the Netherlands and a difference-in-differences design, we show that economic insecurity significantly increases affective polarization, a form of division driven by emotional bias rather than policy disagreements. This effect persists for years, particularly among men, and is accompanied by increased distrust and social group clustering. Our findings suggest that economic insecurity is a key driver of polarization, highlighting the role of labor market stability in shaping political and social cohesion. Addressing economic precarity may help mitigate the spread of polarization in modern democracies.