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Labour market institutions in Hungary with a focus on wage and employment flexibility

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  • Hedvig Horváth

    ()
    (Central European University)

  • Zoltán Szalai

    ()
    (Magyar Nemzeti Bank)

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    Abstract

    It is widely believed today, that the operation of the labour markets is influenced by institutional factors, affecting macroeconomic adjustment in response to shocks. In this way, labour market institutions affect both cyclical and long-term growth and inflation performance of an economy. The aim of our paper is to review the operation of Hungarian labour market institutions from the point of view of labour market flexibility and find its place in international comparison in the light of existing stock of knowledge on the subject. We describe the institutional setup of the labour markets through seven dimensions (unemployment generosity, tax wedge, active labour market policies, employment protection legislation, product market regulation, union density and coverage and wage bargaining institutions) for which internationally comparable data are available. We conclude that the Hungarian labour market institutions are rather flexible in EU-comparison. However, tax wedge is high and the active labour market policies still perform poorly, both contributing to weak employment.

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    Bibliographic Info

    Paper provided by Magyar Nemzeti Bank (the central bank of Hungary) in its series MNB Occasional Papers with number 2008/77.

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    Length: 36 pages
    Date of creation: 2008
    Date of revision:
    Handle: RePEc:mnb:opaper:2008/77

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    Web page: http://www.mnb.hu/
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    Related research

    Keywords: wage flexibility; unemployment; labour market institutions; product market regulation; policy complementarity.;

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    References

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    1. Stephen Nickell & Luca Nunziata & Wolfgang Ochel & Glenda Quintini, 2001. "The Beveridge curve, unemployment and wages in the OECD from the 1960s to the 1990s - preliminary version," LSE Research Online Documents on Economics 20113, London School of Economics and Political Science, LSE Library.
    2. Dean Baker & Andrew Glyn & David Howell & John Schmitt, 2002. "Labor Market Institutions and Unemployment: A Critical Assessment of the Cross-Country Evidence," SCEPA working paper series. SCEPA's main areas of research are macroeconomic policy, inequality and poverty, and globalization. 2002-17, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
    3. Luca Nunziata, 2001. "Institutions and Wage Determination: a Multi-Country Approach," Economics Series Working Papers 2001-W29, University of Oxford, Department of Economics.
    4. Alfonso Arpaia & Declan Costello & Gilles Mourre & Fabiana Pierini, 2005. "Tracking labour market reforms in the EU Member States: an overview of reforms in 2004 based on the LABREF database," European Economy - Economic Papers 239, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
    5. Alfonso Arpaia & Gilles Mourre, 2005. "Labour Market Institutions and Labour Market Performance: A Survey of the Literature," Labor and Demography 0512011, EconWPA.
    6. Ronald Schettkat, 2003. "Are institutional rigidities at the root of European unemployment?," Cambridge Journal of Economics, Oxford University Press, vol. 27(6), pages 771-787, November.
    7. Kertesi, Gábor & Köllő, János, 2004. "A 2001. évi minimálbér-emelés foglalkoztatási következményei
      [The employment consequences of the 2001 rise in the minimum wage]
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(4), pages 293-324.
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    Cited by:
    1. M. Kopasz & Z. Fábián & András Gábos & Márton Medgyesi & P. Szivós & István György Tóth, 2013. "GINI Country Report: Growing Inequalities and their Impacts in Hungary," GINI Country Reports hungary, AIAS, Amsterdam Institute for Advanced Labour Studies.

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