Absolute and relative redistribution and individualism-collectivism dimension : the role of cultural values in income redistribution policies

Abstract

This thesis examines the role of cultural values, specifically the individualism-collectivism (I-C) dimension, in shaping income redistribution policies across countries. Previous literature finds that individualistic societies tend to support greater state-led redistribution, while collectivist cultures rely more on informal support networks, thereby reducing pressure for formal welfare systems. However, much of this research has depended on narrow cultural measures and has paid limited attention to the potential bidirectional relationship between culture and redistribution. This study contributes to the literature by analysing both absolute redistribution (the raw reduction in income inequality via taxes and transfers) and relative redistribution (the proportional reduction relative to pre-tax inequality), using a broader set of cultural indicators— Hofstede’s individualism scores, Schwartz’s value orientations, and the Global Collectivism Index (GCI). It also accounts for possible reverse causality using cross-sectional regression models with robustness checks. The results confirm that individualism is positively associated with both forms of redistribution, especially in countries with strong institutional frameworks. In contrast, collectivist societies exhibit weaker links to formal redistribution, consistent with greater reliance on informal mechanisms. These findings highlight the importance of aligning welfare design with underlying cultural values to ensure policy effectiveness and public acceptance

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