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An Analysis of the Incomes and Current Personal Transfers of Hungarians Living Abroad

Author

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  • Orsolya Csortos

    (Magyar Nemzeti Bank)

  • Balázs Kóczián

    (Magyar Nemzeti Bank)

Abstract

The funds transferred or available for transfer home by households working abroad appear in several items of the balance of payments, which often leads to misunderstandings. This paper therefore attempts to define these concepts. It is necessary to clarify and understand the concepts associated with remittances because they may represent more stable sources of external funding compared to other external sources, and may also shape economic growth, improve the current account and thus contribute to reducing the risk premium and improving investor sentiment on the country. After illustrating the economic significance of the compensation of employees and transfers, we shed light on their trends in recent years in Hungary. The United Kingdom’s referendum on EU membership in June 2016 lends particular relevance to the topic. We show that the compensation of employees working temporarily abroad significantly exceeds the current personal transfers of Hungarian households permanently living abroad, and these significantly improve the current account. Hungarian workers in Germany and Austria received the majority of wages, while the United Kingdom also plays a prominent role alongside Germany in current personal transfers made by Hungarian households living permanently abroad. At the scale of the European Union, the volume of compensation of employees and current personal transfers decreases in parallel with the level of economic development.

Suggested Citation

  • Orsolya Csortos & Balázs Kóczián, 2017. "An Analysis of the Incomes and Current Personal Transfers of Hungarians Living Abroad," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 16(2), pages 5-27.
    • Handle: RePEc:mnb:finrev:v:16:y:2017:i:2:p:5-27
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    References listed on IDEAS

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    Cited by:

    1. Eszter Balogh & Anna Boldizsár & Bence Gerlaki & Balázs Kóczián, 2018. "Developments in the GDP-GNI Gap in Hungary and the CEE Region," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 17(3), pages 57-84.

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    More about this item

    Keywords

    remittances; foreign worker incomes; external funding; labour flow;
    All these keywords.

    JEL classification:

    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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