IDEAS home Printed from
   My bibliography  Save this paper

Unemployment Benefits and Incentives in Hungary: New Evidance


  • Joachim Wolff


This paper analyses the Hungarian unemployment insurance (Ul) benefit reform of 1993, which led to the creation of a less generous benefit system. We investigate a sample of unemployment spells which are drawn from the Hungarian Ul register directly before and after the reform came into force. The focus of the microeconometric duration analysis lies in the interaction of the exit behavior of unemployed people with the Ul system. As exit states we consider employment, subsidised employment, training and (early) retirement. Our results are in support of the hypothesis that the benefit reform increased, significantly, the transition rates from unemployment to all the labour market schemes. In particular, aged people responded to the benefit reform with a substantial rise in their transition rates to (early) retirement. A specific characteristic of our inflow cohort has to be taken into account for the analysis of the employment hazards. A large proportion of our sample represents workers who are likely to be on recall. Their job hazards are extremely sensible to seasonal labour demand fluctuations. We identify these workers and concentrate the analysis of the benefit reform on those workers who are not on recall. They represent workers who most likely were made redundant due to the restructuring of the Hungarian economy. The benefit reforms only slightly increased their speed of return to work. Furthermore, the transition rates to employment are found inelastic to the replacement rate with the exception of women who are below 30 years of age.

Suggested Citation

  • Joachim Wolff, 1997. "Unemployment Benefits and Incentives in Hungary: New Evidance," William Davidson Institute Working Papers Series 111, William Davidson Institute at the University of Michigan.
  • Handle: RePEc:wdi:papers:1997-111

    Download full text from publisher

    File URL:
    Download Restriction: no

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wdi:papers:1997-111. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (WDI). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.