Does Finance Change the Taste for Redistribution?

Roman Horvath, Matej Korinek and Laurent Weill
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Matej Korinek: Institute of Economic Studies, Charles University (Prague)

Working Papers of LaRGE Research Center from Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg

Abstract: This paper investigates whether financial development shapes people’s preferences for redistribution. Although a large literature examines the effects of finance on growth and inequality, much less is known about its influence on the political demand for redistribution. Using individual-level data from the World Values Survey and the European Values Study, we estimate the relation between financial development and preferences for income equality. We find no significant average effect of financial development on redistributive demand. However, this aggregate neutrality masks significant individual-level heterogeneity. We find that financial development is associated with lower support for redistribution among men, married individuals, and right-leaning respondents. In contrast, the effect is significantly positive for more educated individuals. These results suggest that financial development reshapes the political landscape not by shifting average preferences, but by altering the composition and polarization of pro-redistribution coalitions.

JEL-codes: D31 D63 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:lar:wpaper:2026-01

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