Population Aging and the Nexus Between Financial Development and Wealth Inequality

ABSTRACT Wealth is increasingly concentrated at the top, with financial development often cited as a key driver. As populations age, it is crucial to understand how aging reshapes the link between financial development and wealth inequality. Using a cross‐country panel, we find that while financial development generally reduces wealth inequality, its effect may weaken or even reverse when population aging exceeds a threshold. Pathway analysis shows that saving and entrepreneurship mediate these effects. Financial development may dampen them, but aging can moderate or reverse this impact. These findings underscore the importance of demographics in shaping the distributional consequences of financial development.