This paper investigates how the type of home environment – family foster care or residential care – affects the adult outcomes of individuals who were raised in state care during adolescence. While it is established in the literature that living in residential care is detrimental for babies, the effect of living in different types of care as an older child is underexplored. We use Hungarian individual-level administrative panel data and follow the children from age 13 until age 19. We show that the adult outcomes of adolescents who grew up in a foster family are substantially better even after controlling for a rich set of variables, including indicators of cognitive and non-cognitive skills, and mental problems observed at age 13. Young adults who grew up in family foster care are 8 percentage points more likely to complete secondary education, and 11 percentage points less likely to spend at least 6 months without either working or studying at age 19, than comparable peers raised in residential care. Using mental health medication is 5 percentage points less likely. For girls, the probability of teenage birth and abortion are smaller by 12 percentage points each. IV estimations using local foster mother capacity as an instrument reinforce the beneficial effect of family foster care.

In Hungary, initial pensions are indexed to average net wages, reported by official earnings statistics (ES), which does not cover the economy as whole. However, there is alternative statistical source on labour income, the national accounts (NA), intended to cover the total economy. The latter indicate a markedly lower rate of growth in wages than the ES for the period between 2010 and 2020 (4.9 vs. 1.9 percent increase in real gross wages per year). Relying on feasibility tests, we show that the rapid increase reported by the ES cannot, while the milder growth shown by the NA can be reconciled with relevant macroeconomic developments, e.g., changes in productivity and household consumption. We, therefore, claim that the ES overstated the actual increase in wages at the national level during the 2010s, and make our own calculations regarding the path of net wages and implied (hypothetical) initial pensions. The main implications of this exercise are the following: (i) the actual increase in initial benefits (linked to net wages, as reported by the ES) was excessive; (ii) in our estimate, the ratio of average benefits to average net wages did not fall by the extent shown by official statistics (the former is linked to the increase in prices, rather than that of wages). Moreover, (iii) the accumulation of major tensions between cohorts retiring in subsequent years might have been reduced by relying on the more plausible wage statistics reported by the NA, and by taking into account the impact of the dramatically reduced social contribution rate (paid by employers) in calculating initial benefits.

John von Neumann (Budapest, 1903–Washington D.C., 1957) was an exceptional polymath, who made fundamental contributions to mathematical logics, functional analysis, quantum mechanics, game theory, computer architecture and automata theory. In this brief paper, I shall review the game-theoretic results of von Neumann and their legacy in an informal way.

This paper compares the evolution of CE4 countries’ (Czechia, Hungary, Poland, and Slovakia) national innovation systems, as well as their innovation performance. Its analytical framework draws on evolutionary (and institutional) economics of innovation.

Given the structural features and the level of socio-economic development in the CE4 countries, as well as the dominant way of thinking since the cold war, Western politicians, business people, analysts and journalists tend to share a ‘block’ view of these countries. Further, there is a noticeable – and certainly understandable – ‘drive’ also from the academic community to produce findings that can be generalised across the new EU member states, but at least for the CE4 countries, that is, to focus on identifying shared or similar features. Yet a closer look at the structure of the national innovation systems in these countries, as well as at their innovation performance, points to a different direction. While the structural composition of the research sub-systems of the CE4 countries showed a great diversity already in 2000, fairly significant changes have occurred since then almost in all countries, adding more colours to the observed diversity. Neither a similar structural composition of the research sub-system can be observed, nor a move towards a similar structure. Their innovation performance is also diverse.

Given the diversity among innovation systems, one should be very careful when trying to draw policy lessons from the ‘rank’ of a country as ‘measured’ by a composite indicator. The CE4 countries, therefore, need to avoid the trap of paying too much attention to simplifying ranking exercises. Instead, it is of utmost importance to conduct detailed, thorough comparative analyses, identifying the reasons for a reasonable or disappointing performance.

Policy-makers – working on various domains, notably regulations, home affairs, security, science, technology, and innovation (STI) policies – need to pay close attention to possible new ways and methods for the interpenetration of criminal and lawful economic activities. This paper is aimed at assisting these policy-makers by presenting four possible futures (scenarios) on the interpenetration of criminal and lawful economic activities and considering their implications.

These scenarios assume that the interpenetration of criminal and lawful economic activities – just as most other types of crime – cannot be fully eradicated. There are two competing groups of actors whose capacities, activities, and efficiency largely determine the possibilities for, and repercussions of, the interpenetration of criminal and lawful economic activities: criminal actors and law enforcement agencies (LEAs). The scenarios, therefore, are shaped by two main dimensions: i) whether LEAs are well-resourced, strong, and effective or not, and ii) whether large criminal organisations or small-scale ones are the dominant criminal actors. Hence, the four scenarios consider various types of ‘push’ and ‘pull’ factors that influence actors to commit – or not – criminal economic activities; the main types of these activities; features of regulations; research, technological development, and innovation activities by the criminal actors vs LEAs; as well as the activities, capabilities, and resources of LEAs.

By considering the nature of the criminal activities that aim at penetrating lawful economic activities, and the options to prevent, monitor, and fight these crimes, the report explores a range of policy implications, especially for STI policies and regulations. Further, it stresses the multi-level nature of policy-making in the EU, as well as the need for collaboration with the willing countries outside the EU. Criminal actors can penetrate lawful economic activities in the EU when commissioned by hostile (‘rogue’) states that aim to weaken and/or undermine the EU and its Member States as part of their geopolitical power games.

Does a drastic cut in in potential benefit duration affect the take-up of unemployment insurance benefits among those eligible? We evaluate a policy change reducing the maximum length of UI benefits from 9 to 3 months in Hungary at the end of 2011. We rely on rich longitudinal matched administrative data, which allows us to obtain information on a large sample of job losers, and precisely estimate eligibility for UI benefits. We find that slightly less than 60 percent of UI eligible individuals claim benefits, and that while the length of benefit entitlement is only slightly positively correlated with taking up benefits, UI claiming rate tends to increase with previous earnings. We show that the proportion of UI benefit claims fell only slightly (by 1.5 – 2 percentage points), but this effect was more pronounced for those with the largest potential losses in UI value. This moderate effect might be related to the fact that the reform essentially got rid of the period of flat-rate UI benefits, while keeping the period when UI benefits were proportional to previous earnings roughly unchanged.  At the same time, UI take-up decreased among those with low earnings (around the minimum wage) but stable employment, a group with likely little savings, which is alarming from a social policy perspective.

In this study, we investigate the correlation between corruption risk and the level of education in European sub-national regions (NUTS2 level) between 2006 and 2020 in 16 member countries. We use the data of Tenders Electronic Daily (TED) covering the parameters of 6,766,274 public procurement contracts in total and NUTS2 level Eurostat data. We found that higher educational attainment is associated with lower corruption risk and a higher level of control of corruption, indicating that better-educated locals may force authorities to limit corruption risk as they have less tolerance for corrupt behavior. In addition, the results point out that the increasing level of education is associated with a decreasing level of corruption risk. Our study contributes to corruption research by using objective indicators characterizing the NUTS2 regions of some European countries.

The study analyzes the reliability of corruption risk indicators using Hungarian public procurement data, specifically focusing on EU-funded contracts associated with a cartel case revealed by the Hungarian Competition Authority (HCA) in 2016. The investigation aims to determine whether corruption risk indicators for public procurement contracts related to the identified cartel case (214 contracts) are significantly higher than those for similar contracts in different submarkets. The analysis utilizes data from the Corruption Research Center Budapest database, encompassing Hungarian public procurement information from January 1998 to July 2023, totaling around 340,000 contracts or contract lots. Since the cartel case detected by the HCA was part of the EU-funded KEOP program, covering contracts from 2015 to 2016 in the manufacturing sector, our analysis is limited to EU-subsidized contracts in the manufacturing sector awarded in 2015 and 2016.

Our findings highlight that the corruption risk indicator (single bid), endorsed by the EU Single Market Scoreboard, provides valuable insights for identifying anomalies in public procurement. For the identified cartel contracts, the likelihood of a contract being awarded to a single bidder (without competition) was significantly higher compared to contracts not associated with a cartel case. A similarly robust outcome was observed for the indicator measuring contracts concluded with more than three bids. The probability of contracts with more than three bids was significantly lower for cartel contracts than for others.

The indicator assessing the occurrence of rounded winner prices yielded a significant result for one of the three subsamples, and in another, it was significant only at the 10% level. These results affirm the significance of conducting statistical analyses on contracts and the calculation, as well as in-depth examination, of corruption indicators (single bid, more than three bids, and rounded winner price) to identify anomalies in public procurement.

Using data from 32 European countries for nearly 244 million live births between 1969 and 2021, this paper examines the effects of temperatures on birth rates. The results show that exposure to hot days slightly reduces birth rates five to eight months later, while much stronger negative effects are observed nine to ten months after exposure to hot temperatures. Thereafter, a partial recovery is observed, with slightly increased birth rates. This study also shows that the effect of high-humidity hot days is much stronger than that of hot days with low humidity. Besides, the effect of heatwave days has been found to be more severe than that of hot days that are not preceded by other hot days. This study finds that some adaptation to heat can only be expected in the long run, which suggests that climate change may have a negative impact on the number of live births in the twenty-first century.

In 2013, the Hungarian government cut the school leaving age from 18 to 16. We study the impact of this unique reform on the country’s sizeable Roma minority using census data on the universe of 17-year-olds in 2011 and a 10 percent random sample in 2016. School attendance fell by more than 20 percentage points among Roma youth as opposed to less than 6 points with their non-Roma counterparts. Roma’s post-reform drawbacks in school enrolment were predominantly explained by their family background, neighborhood characteristics, and, much less importantly, below-average school performance. Changes in local employment prospects had no remarkable impact on the post-reform ethnic gap. More stringent selection and self-selection by social status and school performance (rather than ethnicity) nevertheless affected the Roma minority disproportionally, with close to 30 percent of their 17-year-old children being out of education, training, and employment three years after the reform.

The aim of this paper is to quantify how much of the initial wage differentials of young workers is explained by the secondary school they attended, and to disentangle the (descriptive) channels contributing to these differences. The analysis is based on the HUN-REN CERS Admin3 database, taking advantage of the fact that for some cohorts, young people’s secondary schooling (and students’ school standardized mathematics test scores) and wage outcomes at their early career can be observed simultaneously. Using wage decomposition methods, we separate the channels of firm and occupational selection from the direct returns to further education. Our analysis suggests that about 10 percent of the total wage dispersion of young people aged 18-25 (and already working) is generated at the school level. This also implies that the correlation between the wages of any two students of the same school is 0.1. Another novelty of the paper is that we show that a substantial part of these correlations are due to occupational and workplace selection (e.g. students from a given school type are systematically more likely to go on to well-paid jobs). If we remove these selection effects, the effect of schools on wage dispersion, the correlation between the latent skills of students, shrinks to 4 percent. Finally, we also compare schools of different quality based on different school characteristics (e.g. average test scores), which allows us to further stress the importance of the selection channels.

Good management practices are important determinants of firm success. It is unclear, however, to what extent pro-management policies can shape aggregate outcomes. We use data on corporations and their top managers in Hungary during and after its post-communist transition to document a number of salient patterns. First, the number of managers is low under communism when most employment is in large conglomerates. After the transition to capitalism, the number of managers increased sharply. Second, economics and business degrees became more popular with capitalist transition. Third, newly entering managers tended to run smaller firms than incumbent managers. We build a dynamic equilibrium model to explain these facts. In the model, the number and average quality of managers react to schooling and career choice. We use the model to evaluate hypothetical policies aiming to improve aggregate productivity through management education and corporate liberalization. Our results suggest that variations in the supply of good managers are important to understand the success of management interventions.