This report compares the economic performance of four Central European countries, namely Czechia, Hungary, Poland, and Slovakia (henceforth: CE4 countries). Many authors emphasise the similarities between the V4 countries – sometimes even the former planned economies of CEE –, i.e., the former ‘bloc approach’ is still dominant. However, key economic indicators – GDP, productivity, unemployment, inflation, budget deficit, trade balance, and the structure of export – paint a different picture. From a Hungarian perspective, the better performance of the other three countries – also reflected in their ranking in international scoreboards – is particularly noteworthy.

We estimate the impact of firm quality — primarily measured by firm productivity — on the health maintenance of employees. Using linked employer-employee administrative panel data from Hungary, we analyze the dynamics of healthcare use before and after moving to a new firm. We show that moving to a more productive firm leads to higher consumption of drugs for cardiovascular conditions and more physician visits, without evidence of deteriorating physical health, and, among older workers, to lower consumption of medications for mental health conditions. The results are robust to using alternative firm quality indicators based on firm-level wages and worker flows, and to controlling for firm size, individual wage and possible peer effects. The results suggest that more productive firms have a beneficial effect on the detection of previously undiagnosed chronic physical illnesses and on mental health. Plausible mechanisms include higher quality occupational health check-ups and less stressful working conditions.

This paper studies tax evasion and the contribution-benefit link in the context of maternity benefits in Hungary. Earnings and employment patterns suggest pre-pregnancy underreporting, followed by formalization of some earnings and employment during pregnancy to increase benefits. Reported earnings in small, domestic, and less productive firms bunch at the minimum wage before pregnancy and the benefit-maximizing threshold during pregnancy. Using a policy reform, the paper shows that the size of the reporting response tracks changing reporting incentives. Increases in pre-childbirth reported earnings are partially sticky after maternity leave. The results indicate that linking benefits to contributions can reduce tax evasion and improve formalization.

Rising inequalities and deprivation have been important drivers for social innovation (SI). We understand SIs as novel initiatives or novel combinations of known solutions, aimed at tackling a societal problem or creating new societal opportunities, applied in practice. SIs success requires enabling institutional framework that facilitate collaborative agency for its design and implementation. However, authoritarian governance undermines such framework conditions. Authoritarian regimes feed on social polarisation, centralisation of power, strengthening of hegemonic governance modes, weakening transparency, accountability, and the rules of law. Hungary has become a prime example of democratic backsliding with socio-spatial disparities intensified by perverse public policies and clientelist patterns of relations. By presenting two SI cases from Hungary, this paper illustrates different ways, in which ‘insider’ and ‘outsider’ SI practitioners can interact with, and operate in, an authoritarian system. It discusses how agents’ different positions influence their SI practices and strategies and offers theoretical and practical implications.

This paper examines how temperature affects emergency department (ED) visits, using administrative data covering 50% of the Hungarian population and comprising 3.52 million outpatient visits from 2009 to 2017. Days with an average temperature above 25°C increase the ED visit rate by 4.65 visits per 100,000 people over an 11-day period (1.60% increase), compared to days with a mean temperature of 5–10°C. The effects of other warmer temperature categories are similarly positive, while colder temperatures show no significant impact. Higher humidity intensifies the heat effect, which is also stronger following consecutive hot days. Between 2009 and 2017, 46,800 ED visits (0.66% of total visits) were attributed to changes in the temperature distribution relative to 1950–1989. Furthermore, by the 2050s, compared to the early decades of the 21st century, the annual ED visit rate is projected to increase by 1.24%–1.70%, depending on the climate scenario. The future impacts of climate change are 30–40% stronger in low-income districts and disproportionately affect younger adults aged 18–44, who face over four times the impact compared to individuals aged 65 and older.

By using Hungarian administrative data we evaluate the impact of a start-up subsidy programme on the labour market integration of the unemployed. When – following the generally accepted method – the control group included everyone who could have participated in the programme but did not, the effect of the support was positive and consistent with previous research. However, in contrast to numerous other active labour market programmes, a distinctive aspect of start-up support schemes is that the unemployed person leaves unemployment status immediately upon entry. Therefore, we also created a second control group, where only those members of the first control group were included, who exited unemployment at the same time as the treatment group. Although statistically significant positive effects were also found in the second control group, the effect size was only one-third to one-quarter of that in the first control group. Additionally, this second model is highly susceptible to unobserved heterogeneity. Thus, it seems that the strong positive effect is mainly due to the fact that a significant proportion of the members of the first control group perform worse than the members of the second control group in terms of the unobserved characteristic that is important for the labour market. Our results show that the support mostly helps groups with less favorable labor market prospects, so tightening the eligibility criteria could improve the efficiency of the programme.

This paper uses rich firm-level data from Hungary to present some stylized facts on services trade. We show that (i) services exporters are even more rare than goods exporters; (ii) services exports are highly concentrated; (iii) services exporters are more likely than goods exporters to be located in cities; (iv) services exports tend to be preceded by services imports; (v) manufacturing firms also export services with services exports following goods exports in terms of timing and destinations; and (vi) services exporters have comparable premia to goods exporters.

Using individual-level EU-LFS data from nine European countries, this study analyses how the probability of occupational and job mobility has changed in the first year of the COVID pandemic in nine European countries compared to previous years. We show that the probability of leaving a job increased slightly, and the probability of changing occupations and moving between jobs decreased, although the latter effect was less pronounced. If we distinguish between employment changes within the firm and employment changes related to job changes, the probability of the former type of employment changes has decreased and the latter type has remained unchanged. These results are consistent with previous studies on the impact of the economic crisis on job and occupational mobility. The impact of the pandemic was heterogeneous across countries, with Hungary a massive outlier. This is likely due to the belated and strict conditions of the job retention scheme there.

The expansion of higher education has resulted in a fragmentation of student careers on a global scale. The number of students pursuing atypical pathways has been growing. In the European Union, the Bologna Process has facilitated the mobility of students across higher education institutions, the transition between different courses of study, increasing the diversity of pathways. The existing literature on higher education careers agrees that the most appropriate approach to studying training pathways is a dynamic one. In our paper, using a rich, individual-level administrative research database, we trace higher education pathways over six years at the monthly level and then categorise them using sequence analysis. For this information on the monthly educational statuses and on parallel employment status and parallel studies were taken into account. The resulting student life course categories were also examined regarding individuals’ cognitive skills, educational and family background. Finally, regression estimates were used to examine each trajectory type’s early labor market success. To examine the educational and labor market pathways of individuals over seven years is unique in the region, as the combined analysis of higher education careers and subsequent labor market success too.

This paper examines the impact of occupational regulation, a labour market institution affecting many workers, on labour market fluidity in Europe. Using data from 10 European countries, we estimate the effect of occupational regulation on occupational mobility (transition to another occupation) and job loss (transition from employment to unemployment). By leveraging the variation in regulation across countries within an occupation, we identify the regulation effect using a two-way fixed effects approach. We also compare the effects of more and less stringent forms of regulation. The results show that occupational regulation substantially decreases occupational mobility, while its effect on job loss is ambiguous. More stringent regulation (occupational licensing) has a more substantial effect than weaker requirements.

This study investigates the predictors of incarceration among a cohort of Hungarian primary school students aged 14-15, followed until they are 23-24 years old. We analyze how school quality (including mean test performance and peer characteristics), exclusionary practices, and school/student non-compliance affect the likelihood of incarceration, time spent in prison, and recidivism. Employing linear (OLS) and non-linear (logit, Poisson) models, as well as clustering methods to assess career-path heterogeneity, we identify several key school-level variables as strong indicators of future legal conflicts. The sample comprises 50% of all eighth-graders who were obliged to take a basic competencies test in 2008, with about 1% incarcerated at least once over the next nine years. The predicted probability of incarceration is 0.5% for boys in low-status, well-performing schools, but it increases to 1.0% in low-status, poorly performing schools (at the mean/baseline of other regressors). Absence on the test day raises the risk to 2.8%, and in schools with high grade repetition rates and insufficient support services, the likelihood rises to 8.1%. Although these factors may not directly cause delinquency (some being arguably endogenous), they highlight symptoms associated with a higher risk of criminal behavior, providing valuable insights for targeted interventions by parents and school authorities.

This paper investigates whether there have been time periods between 1999 and 2019 in Hungary when government spending has been self-financing, i.e., when the government has faced a fiscal free lunch. By self-financing, it is meant that government spending, initially financed by issuing bonds, does not lead to an increase in the debt-to-GDP ratio due to improvements in the budget balance resulted in by stimulated economic activity. Some macroeconomists think that while government spending is arguably not self-financing in normal times, it could have become self-financing in the United States (US) during the Global Financial Crisis (GFC) due to 1) stronger fiscal multipliers, 2) stronger hysteresis effects, and 3) lower interest rates than usually. This paper estimates the parameters of a simple model of debt dynamics on Hungarian data to study whether these arguments also hold for an emerging small open economy, like Hungary, in which fiscal multipliers are thought to be weaker, and where interest rates increased during the GFC. It is found that government spending has not been self-financing in the short run before the GFC (1999Q1-2008Q3), has been at the edge of being expected to be self-financing in the long run, but has not actually turned out to be. During the GFC (2008Q4-2012Q4), it cannot be excluded to have been self-financing in the long run, and might have already been self-financing in the short run, as well. However, these findings are much less robust than those for the US. Between the GFC and the COVID recession (2013Q1-2019Q4), government spending was not self-financing in the short run, but was expected to be self-financing in the long run.