Does Finance Change the Taste for Redistribution?
Does Finance Change the Taste for Redistribution?
| Authors: | Roman Horvath Matej Korinek Laurent Weill |
|---|---|
| Published in: | IES Working Papers 10/2026 |
| Keywords: | preferences for redistribution, financial development, income inequality |
| JEL Codes: | D31, D63, O16 |
| Suggested citation: | Horvath R., Korinek M., Weill L. (2026): " Does Finance Change the Taste for Redistribution? " IES Working Papers 10/2026. IES FSV. Charles University. |
| 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. |
| Download: | wp_2026_10_horvath, korinek, weill |
