The Political Economy of Xenophobia and Distribution: The Case of Denmark*


  • *

    We are grateful to the Russell Sage Foundation for having financed this project. We thank Woojin Lee for his advice on econometric issues. We are also grateful to the Danish Statistical Archive for providing us with the Danish election studies. The project originated while Van der Straeten was visiting Yale University; financial support for her stay from the Department of Economics and the Cowles Foundation is gratefully acknowledged.


For the first time in some years, a conservative government came to power in Denmark in 2001, due primarily to the citizenry's disaffection with social-democratic policies on immigration. We represent political competition in Denmark as taking place over two issues—the size of the public sector and immigration—and model political equilibrium using the party unanimity Nash equilibrium (PUNE) concept, which generates equilibria on multi-dimensional policy spaces where parties form endogenously. By fitting the model to Danish data, we argue that citizen xenophobia may be expected to decrease the size of the Danish public sector by an amount between 12% and 36% of one standard deviation of the probability distribution of citizens' ideal points of the size of the public sector.