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The Effects of Changing Labor Markets and Social Policies on Income Inequality and Poverty: Hungary and the Other Visegrad Countries Compared

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  • István Tóth
  • Michael Förster

Abstract

The transition to a market economy has lead to liberalization in a great many spheres of society in the reform economies of Central and Eastern Europe. At the same time, financial insecurity of many households persisted or increased, and certain parts of the population face for the first time risks of impoverishment. To respond to this situation and to design effective programs combating poverty under budgetary constraints is therefore one of the prime objectives of social policy in these countries. We argue in the paper that there may be two major determinants of income inequalities and poverty. First and foremost, labour and capital markets play a very important role, through the allocation of jobs and earnings opportunities to the various segments of the population. Secondly, social policies, via the redistribution of taxes through the state budget from those having higher incomes to those having lower incomes also play a role in shaping income inequalities.

Suggested Citation

  • István Tóth & Michael Förster, 1998. "The Effects of Changing Labor Markets and Social Policies on Income Inequality and Poverty: Hungary and the Other Visegrad Countries Compared," LIS Working papers 177, LIS Cross-National Data Center in Luxembourg.
    • Handle: RePEc:lis:liswps:177
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    1. Timothy Smeeding & Gunther Schmaus & Brigitte Buhmann & Lee Rainwater, 1988. "Equivalence Scales, Well-Being, Inequality and Poverty: Sensitivity Estimates Across Ten Countries Using the LIS Database," LIS Working papers 17, LIS Cross-National Data Center in Luxembourg.
    2. Timothy Smeeding & Barbara Torrey & Debra Bailey Whitman, 1995. "Rowing Between Scylla and Charybdis: Income Transitions in Central European Households," LIS Working papers 132, LIS Cross-National Data Center in Luxembourg.
    3. Atkinson,Anthony Barnes & Micklewright,John, 1992. "Economic Transformation in Eastern Europe and the Distribution of Income," Cambridge Books, Cambridge University Press, number 9780521433297, June.
    4. Sen, Amartya K, 1976. "Poverty: An Ordinal Approach to Measurement," Econometrica, Econometric Society, vol. 44(2), pages 219-231, March.
    5. Adam Szulc, 1996. "Economic Transition and Poverty: The Case of the Vysehrad Group Countries," LIS Working papers 138, LIS Cross-National Data Center in Luxembourg.
    6. repec:bla:revinw:v:34:y:1988:i:2:p:115-42 is not listed on IDEAS
    7. Michael Förster, 1993. "Comparing Poverty in 13 OECD Countries Traditional and Synthetic Approaches," LIS Working papers 100, LIS Cross-National Data Center in Luxembourg.
    8. Timothy M. Smeeding & Peter Gottschalk, 1998. "The International Evidence on Income Distribution in Modern Economies: Where Do We Stand?," International Economic Association Series, in: Yair Mundlak (ed.), Contemporary Economic Issues, chapter 3, pages 39-61, Palgrave Macmillan.
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    Cited by:

    1. Kattuman, Paul & Redmond, Gerry, 2001. "Income Inequality in Early Transition: The Case of Hungary 1987-1996," Journal of Comparative Economics, Elsevier, vol. 29(1), pages 40-65, March.
    2. Adam Szulc, 2008. "Checking the consistency of poverty in Poland: 1997-2003 evidence," Post-Communist Economies, Taylor & Francis Journals, vol. 20(1), pages 33-55.
    3. István Tóth & Michael Förster, 2000. "Trends in Child Poverty and Social Transfers in the Czech Republic, Hungary and Poland: Experiences from the Years after Transition," LIS Working papers 226, LIS Cross-National Data Center in Luxembourg.

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