This study uses Costa Rica as a case study to examine the impact of income shocks and inequality on two facets of the global transformation in electoral dynamics: declining voter turnout and the rise of multi-party systems. Since 1998, Costa Rica has experienced a significant drop in voter turnout, providing a unique lens to explore these socio-economic influences. By merging electoral registries with social security employer-employee records, this research offers novel insights from a developing democracy with a solid electoral tradition. The analysis finds a positive relationship between income and voter turnout, with inequality playing a pivotal role. High inequality mobilises voters at the income extremes, while lower inequality fosters greater participation from middle-income groups. Individuals facing downward income mobility are likelier to vote, indicating that economic hardship spurs electoral engagement. These results are robust to three identification strategies: random assignment of voters to polling stations inside the same polling centres, loss of income associated with unexpected mass layoffs, and changes of income related to changes in international prices of agricultural products. The study also investigates Costa Rica’s transition from a two-party to a multi-party system after 2002. Income shocks have significantly altered electoral outcomes, particularly for the PLN, which has shifted from its traditional voter base in the middle of the income distribution to a more substantial reliance on the poorest and economic elites. Polling stations with more upwardly mobile voters now increasingly mirror the voting behaviour of the top 1%, underscoring the PLN’s changing voter appeal.