Growing together or apart? Regional inequality and preferences for inter-territorial redistribution

Abstract Even though political conflict on inter-territorial inequality appears to play a crucial role in understanding salient political developments in Western democracies, we still have a limited understanding of how individuals form inter-territorial redistributive preferences. We argue that relative regional income – meaning the degree of equally shared economic growth across places – serves as a cue for voters to evaluate their individual future benefits from inter-territorial redistribution. We propose that absolute regional income, defined as a region being richer or poorer today, polarizes preferences over inter-territorial redistribution under contexts of rising inequality in relative income gains. We test this argument with a factorial survey experiment in France and Germany, where respondents are randomly exposed to different information about relative and absolute regional income. We find that absolute regional income is an important determinant of preferences for inter-territorial redistribution as relative income gains are skewed to the richest areas. The difference in absolute income, however, loses explanatory power for redistributive preferences as relative income gains are distributed more equally, demonstrating that equality in economic gains can unite poor and rich areas in their redistributive preferences. This interactive relationship between relative and absolute regional income is also found in an observational study of inter-territorial redistributive preferences across 146 regions from nine European countries, underlining the external validity of our findings.