Working Papers

Competition, confidence and gender: shifting the focus from the overconfident to the realistic

TÜNDE LÉNÁRD – DÁNIEL HORN – HUBERT JÁNOS KISS

2023/27

The gender gap in competitiveness is argued to explain gender differences in later life outcomes, including career choices and the gender wage gap. In experimental settings, a prevalent explanation attributes this gap to males being more (over)confident than females (we call this the compositional channel). While our lab-in-the-field study using data from students in 53 classrooms (N$>$1000) reproduces this finding, it also uncovers a second, potentially more impactful channel of confidence contributing to the gender gap in competitiveness (the preference channel). To disentangle the two channels, we propose a more precise measure of confidence based on whether the subjects’ believed performance rank exceeds, coincides with or falls short of their actual performance in a real-effort task. We label categories of this Guessed – Actual Performance (GAP) difference as overconfident, realistic or underconfident, respectively. Surprisingly, there is no gender difference in competitiveness within the over- and underconfident subgroups, while a significant gender gap exists among the realistic. So, even if both genders had the same level of confidence, a persistent gender gap in preference (or taste) for competition would remain in the realistic group. This finding is robust across all specifications, challenging previous theories about the overconfidence of men being the sole driver of the relationship between confidence and the gender gap in competition.

2024

Evaluating the effect of a drastic cut in unemployment benefit duration on re-employment and wages of jobseekers

MÁRTON CSILLAG – ÁGOTA SCHARLE – BALÁZS MUNKÁCSY

2023/26

We evaluate the effect of a drastic cut in potential benefit duration, 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 UI benefit claimants, and we use matching methods to evaluate the effect of the benefit cut. While UI claimants found jobs more rapidly as a result of the reform, this is a relatively small change, and we find only negligible negative effects of reemployment wages overall. The notion that changes are due to the reform is reinforced by the result that the effect on employment is largest for the group where the ‘bite’ of the reform was the largest. Our heterogeneity analysis reveals that the drastic cut seems to have reduced moral hazard for the most employable (those with tertiary education) and forced them to be ‘less picky’. This means that they took up lower wage jobs, but this effect was only temporary. Overall, the reform led to significantly lower income for over 60 percent of jobseekers, since the increase in labour income did not compensate for the large reduction in UI benefits paid; while only benefiting less than 10 percent of jobseekers, over a two-year horizon.

2024

Temperature exposure and sleep duration: evidence from time use surveys

TAMÁS HAJDU

2023/25

The Earth’s climate is projected to warm significantly in the 21st century, and this will affect human societies in many ways. Since sleep is a basic human need and part of everyone’s life, the question of how temperature affects human sleep naturally arises. This paper examines the effect of daily mean temperature on sleep duration using nationally representative Hungarian time use surveys between 1976 and 2010. Compared to a mild temperature (5-10 °C), colder temperatures do not influence sleep duration. However, as daily mean temperatures rise, sleep duration starts to strongly decline. The effect of a hot (>25 °C) day is −12.4 minutes, but if preceded by a few other hot days, the effect is even stronger, −22.7 minutes. The estimated sleep loss is especially large on weekends and public holidays, for older individuals, and men. Combining the estimated effects with temperature projections of twenty-four climate models shows that the warming climate will substantially decrease sleep duration. The projected impacts are especially large when taking into account the effects of heatwave days. This study also shows that different groups in society are likely to be affected in significantly different ways by a warming climate.

2024

A rational pension reform package: Hungary, 2025

ANDRÁS SIMONOVITS

2023/24

As part of the Recovery and Resilience Plan (RRP, 2023), the Hungarian government pledged to reform the pension system. The main themes are sustainability and adequacy. The pension plan is to be discussed publicly and put into law by March 2025. The last detailed official pension study was the 2016-discussion paper of the Hungarian National Bank which should be updated. The present study is a private work which may contribute to the improvement of the current pension system. The current and the projected states of the Hungarian pension system are outlined, and then simple and complex reforms are formulated. Naming just two reform steps, I start with the simplest step: the return to public discussion steered by a revitalized Fiscal Council and end with the most complex: the introduction of the flexible (variable) retirement age.

2024

The development of the Central and Eastern European venture capital market in Europe

JUDIT KARSAI

2023/23

The working paper examines the role and development of the Central and Eastern European venture capital sector in the five years between 2016 and 2020. This period includes both the end of the recovery after the economic crisis in 2008 and the downturn due to the coronavirus crisis in 2019. A statistical analysis of venture capital funds and investments in the CEE region confirms that, while the overall position of the region in Europe did not change over the period under review, the differences between countries in the region increased sharply. The northern part of the region rivals the most developed countries in Europe, the central part is driven by an abundance of public resources, while the venture capital sector in the south is only in its infancy. The size of the venture capital funds in the region is far below the European average, so the start-ups only have a chance to become successful if they are involved in the international flow of venture capital. The role of the government in the funds in the region is extremely high, but the selection between companies is therefore not based solely on market considerations. Rent-seeking behaviour goes against the essence of venture capital. As a result of the deterioration of the global political and economic situation, the entire Central and Eastern European region is losing its ability to attract capital.

2024