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13 - Goulash Labour Market Structural Reforms

Hungary, 1986–2016

from Part III - Case Studies

Published online by Cambridge University Press:  31 March 2020

Nauro F. Campos
Affiliation:
University College London
Paul De Grauwe
Affiliation:
London School of Economics and Political Science
Yuemei Ji
Affiliation:
University College London
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Summary

This chapter investigates structural labour market reforms in Hungary from 1986 to 2016, a period encompassing the fall of communism, EU accession in 2004 and the global financial crisis. Using the narrative approach, we identify three main labour reforms: in 1992 and 2002 aimed at increasing and in 2012 aimed at decreasing employment protection. We study their effects using a unique data set of about 6 million Hungarian wage earners. We find that (1) the skill premium almost doubled from 6.4 per cent in 1986 to 12.3 per cent in 2016, but peaking in 2004; (2) the gender wage gap decreased to a third with the difference in log wages declining from 0.31 in 1986 to 0.13 in 2004, with no changes thereafter; and (3) gender discrimination practically halved as the unexplained component from the Oaxaca decomposition of the difference in log wages decreased from 0.27 in 1989 to 0.15 after 2004.

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Publisher: Cambridge University Press
Print publication year: 2020

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