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Unemployment Insurance and Incentives in Hungary

Author

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  • Micklewright, John
  • Nagy, Gyula

Abstract

We investigate the effect of changes in unemployment insurance (UI) rules in Hungary on the outflow rate from the UI register. Existing claims to UI are `grandfathered' in Hungary when UI rules change - new rules are applied only to new claims and existing claims continue to be administered under the old rules. Entitlement periods to UI were cut substantially at the start of 1993 and using non-parametric methods we compare the outflow rate from claims beginning in January 1993 with those beginning in December 1992 - a total sample size of 80,000 claims. Differences in job exit hazards between the December and January samples are found for some work history groups, but there are no sharp rises in the hazards before expiry of UI entitlement. Hazards of exits to labour market programmes do rise just before UI expiry. The results suggest the unemployed in Hungary to be fairly inelastic to changes in UI benefits.

Suggested Citation

  • Micklewright, John & Nagy, Gyula, 1995. "Unemployment Insurance and Incentives in Hungary," CEPR Discussion Papers 1118, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:1118
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    Citations

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    Cited by:

    1. John Micklewright & Gyula Nagy, 1997. "The Implications of Exhausting Unemployment Insurance Entitlement in Hungary," Papers iopeps97/8, Innocenti Occasional Papers, Economic Policy Series.
    2. Voicu, Alexandru, 2005. "Employment dynamics in the Romanian labor market. A Markov chain Monte Carlo approach," Journal of Comparative Economics, Elsevier, vol. 33(3), pages 604-639, September.
    3. Trine Filges & Lars Pico Geerdsen & Anne‐Sofie Due Knudsen & Anne‐Marie Klint Jørgensen & Krystyna Kowalski, 2013. "Unemployment Benefit Exhaustion: Incentive Effects on Job Finding Rates: A Systematic Review," Campbell Systematic Reviews, John Wiley & Sons, vol. 9(1), pages 1-104.
    4. Nagy, Gyula & Micklewright, John, 1998. "Segélyezés, életszínvonal és ösztönzés a munkanélküli-járadék kimerítése után [The implications of exhausting unemployment insurance entitlement in Hungary]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(5), pages 401-423.
    5. Micklewright, John & Nagy, Gyula, 1999. "Living standards and incentives in transition: the implications of UI exhaustion in Hungary," Journal of Public Economics, Elsevier, vol. 73(3), pages 297-319, September.
    6. Janos Kollo, 2001. "The patterns of non-employment in Hungary's least developed regions," Budapest Working Papers on the Labour Market 0101, Institute of Economics, Centre for Economic and Regional Studies.
    7. Pablo de Pedraza, 2008. "Labour Market Matching Efficiency In The Czech Republic Transition," William Davidson Institute Working Papers Series wp920, William Davidson Institute at the University of Michigan.
    8. Micklewright, John & Nagy, Gyula, 1999. "Living Standards and Incentives in Transition: the Implications of Unemployment Insurance Exhaustion in Hungary," CEPR Discussion Papers 2061, C.E.P.R. Discussion Papers.
    9. Martina Lubyova & Jan C. van Ours, 1997. "Work Incentives and the Probability of Leaving Unemployment in the Slovak Republic," Tinbergen Institute Discussion Papers 97-071/3, Tinbergen Institute.
    10. Puhani, Patrick A., 1996. "Poland on the dole: unemployment benefits, training, and long-term unemployment during transition," ZEW Discussion Papers 96-30, ZEW - Leibniz Centre for European Economic Research.
    11. Trine Filges & Anders Bruun Jonassen & Anne‐Marie Klint Jørgensen, 2018. "Reducing unemployment benefit duration to increase job finding rates: a systematic review," Campbell Systematic Reviews, John Wiley & Sons, vol. 14(1), pages 1-194.
    12. Solomon W. Polachek & Jun (Jeff) Xiang, 2006. "The Effects of Incomplete Employee Wage Information: A Cross-Country Analysis," Research in Labor Economics, in: The Economics of Immigration and Social Diversity, pages 35-75, Emerald Group Publishing Limited.
    13. repec:eee:labchp:v:3:y:1999:i:pb:p:2809-2857 is not listed on IDEAS
    14. David Newbery & Tamas Révész, 2000. "The Evolution of the Tax Structure of a Reforming Transitional Economy: Hungary 1988–98," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 7(2), pages 209-240, March.
    15. Svejnar, Jan, 1999. "Labor markets in the transitional Central and East European economies," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 42, pages 2809-2857, Elsevier.
    16. Galasi, Péter, 1996. "Munkanélküliek álláskeresési magatartása [Job-searching behaviour of the unemployed]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(9), pages 805-815.

    More about this item

    Keywords

    Hungary; Incentives; Transition; Unemployment Benefit;
    All these keywords.

    JEL classification:

    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
    • P35 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Public Finance

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