The goal of this paper is to analyze the connections Hungarian income and wealth distribution on the one hand, and the macroeconomics impacts of the global financial crisis of 2007-2008 on the other hand. To do this, I build a heterogenous agent, dynamic, general equilibrium model, which I calibrate using Hungarian income distribution data before the crisis. The model is then used to study both the impact of the financial crisis on income and wealth inequality, and the role of income and wealth inequality in the macroeconomic developments after the crisis. Results indicate that (i) the long-run capital stock rises, and the interest rate falls, but the effect is quantitatively small; (ii) the long-run income and wealth distributions only change moderately; and (iii) the short-run consumption response of low-wealth household is very strong, and drives a sizable aggregate consumption drop as well.

This study aims to contribute to the literature of firms and occupations as prominent drivers of wage-inequality in multiple ways. First, we synthesize novel modelling approaches of recent studies in the field and use administrative linked employer-employee panel data from an Eastern European country, Hungary, to assess the contribution of individual, firm and job heterogeneity – and their interactions – to overall wage inequality. Consistent with earlier findings from Western Europe, Scandinavia, the US and Brazil, we show that firm heterogeneity provides around 22%, individual heterogeneity 50%, and occupational heterogeneity 8% of overall wage dispersion, with wage sorting between firms and individuals in itself explaining around 9%. Notably, around half of this contribution is accountable to observable sub-components of individual and firm wage effects. Also, the same magnitude of assortativity can be found between individuals and occupations. Utilizing unique features of our data, we compare mathematics and literature test score records of 10^th grade students to their future labor market outcomes, finding a positive correlation between test scores and future firm value added, a direct evidence for assortative matching in productivity. Finally we assess sorting along observable characteristics, such as gender, education, occupation or age of workers, and the ownership of employers.

The strong and increasing positive correlation between lifetime income and life expectancy (the longevity gap) has recently been widely studied. In this paper we employ the simplest, minimal model to demonstrate the impact of this long-neglected fact on the various types of public pension systems, especially on the issue of progressivity and neutrality.

We introduce a dynamic principal-agent model to understand the nature of contracts between an employer and an independent gig worker. We model the worker’s self-respect with an endogenous participation constraint; he accepts a job offer if and only if its utility is at least as large as his reference value, which is based on the average of previously realized wages. If the dynamically changing reference value capturing the worker’s demand is too high, then no contract is struck until the reference value hits a threshold. Below the threshold, contracts are offered and accepted, and the worker’s wage demand follows a stochastic process. We apply our model to different labor market structures and investigate first-best and second-best solutions. We show that a far-sighted employer may sacrifice instantaneous profit to regulate the agent’s demand. Employers who can afford to stall production due to a lower subjective discount rate will obtain higher profits. Our model captures the worker’s bargaining power by a vulnerability parameter that measures the rate at which his wage demand decreases when unemployed. With a low vulnerability parameter, the worker can afford to go unemployed and need not take a job at all costs. Conversely, a worker with high vulnerability can be exploited by the employer, and in this case our model also exhibits self-exploitation.

This paper measures social mobility rates in Hungary 1949-2017, for upper class and underclass families, using surnames to measure social status. In these years there were two very different social regimes. The first was the Hungarian People’s Republic, 1949-1989, a Communist regime with an avowed aim of favouring the working class. Then the modern liberal democracy, 1989-2020, a free-market economy. We find five surprising things. First, social mobility rates were low for both upper- and lower-class families 1949-2017, with an underlying intergenerational status correlation of 0.6-0.8. Second, social mobility rates under communism were the same as in the subsequent capitalist regime. Third, the Romani minority throughout both periods showed even lower social mobility rates. Fourth, the descendants of the noble class in Hungary in the eighteenth century were still significantly privileged in 1949 and later. And fifth, while social mobility rates did not change measurably during the transition, the composition of the political elite changed fast and sharply.

We examine how first in family (FiF) graduates (those whose parents do not have university degrees) fare on the labor market in England. We find that among women, FiF graduates earn 7.4% less on average than graduate women whose parents have a university degree. For men, we do not find a FiF wage penalty. A decomposition of the wage difference between FiF and non-FiF graduates reveals that FiF men earn higher returns on their endowments than non-FiF men and thus compensate for their relative social disadvantage, while FiF women do not. We also show that a substantial share of the graduate gender wage gap is due to, on the one hand, women being more likely to be FiF than men and, on the other hand, that the FiF wage gap is gendered. We provide some context, offer explanations, and suggest implications of these findings.

This paper investigates the relative importance of confidence in public institutions in explaining cross-country differences in the severity of the COVID-19 pandemic. We extend the related literature by employing regression and machine learning methods to identify the most critical predictors of deaths attributed to the pandemic. We find that a one standard deviation increase (e.g., the actual difference between the US and Finland) in confidence is associated with 350.9 (95% CI -531.922 – -169.831, p=0.000) fewer predicted deaths per million inhabitants. Confidence in public institutions is one of the most important predictors of deaths attributed to COVID-19, compared to country-level measures of individual health risks, the health system, demographics, economic and political development, and social capital. Our results suggest that effective policy implementation requires citizens to cooperate with their governments, and willingness to cooperate relies on confidence in public institutions.

High school track choice determines college access in many countries. We hypothesize that some qualified students avoid the college-bound track simply because they overestimate admission requirements. To test this hypothesis, we designed a randomized field experiment that communicated the admission standards of local secondary schools on the academic track to students in Hungary before the application deadline. We targeted the subset of students (“seeds”) who occupied the most central position in the classroom-social networks, aiming to detect both direct effects on the track choice of targeted seeds and spillover effects on their untreated peers. We found neither a direct effect nor a spillover effect on students’ applications or admissions on average. Further analyses, however, revealed theoretically plausible heterogeneity in the direct causal effect of the intervention on the track choice of targeted seeds. Providing information about admission standards increased applications and admissions to secondary schools on the academic track among seeds who had a pre-existing interest in the academic track but were unsure of their chances of admission. This demonstrates that publicizing admissions standards can set students on a more ambitious educational trajectory. We discuss implications for theory and policy.

Az államnak fontos szerepe van a startupok minden egyes fejlődési szakaszának finanszírozásában. A startupok finanszírozásának túlnyomó részét vissza nem térítendő állami támogatás és a hitelnyújtás biztosítja, mely utóbbit állami garanciavállalás is segíti. A kockázati tőke szerepe sokkal kisebb. Az állam azonban ezt is segítheti, mégpedig elsősorban a privát befektetőkkel való társfinanszírozás és a privát kockázati tőkealapok tőkéjének megemelése révén. A kockázati tőkealapok feltőkésítésének előmozdításához fontos eszköz az alapok privát befektetői által igénybe vehető állami garancia. Az állam a startupok finanszírozásában legeredményesebben nem a cégeknek közvetlenül nyújtott pénzeszközökkel, hanem a finanszírozás katalizátoraként, a piac privát szereplőinek ösztönzésével tud részt venni. Az alábbi elemzés bemutatja, hogy az állami segítség nemzetközileg kialakult megoldásai közül melyek és milyen sikerrel terjedtek el.

Low-wage jobs are often regarded as dead-ends in the labour market careers of young people. Previous research focused on disentangling to what degree the association between a low-wage job at the start of working life and limited chances of transitioning to better-paid employment is causal or spurious. Less attention has been paid to the channels that may facilitate the upward wage mobility of low-wage workers. We focus on such mechanisms, and we scrutinize the impact of social ties to higher-educated co-workers. Due to knowledge spillovers, job referrals, as well as firm-level productivity gains, having higher-educated co-workers may improve an individual’s chances of transitioning to a better-paid job. We use linked employer-employee data from longitudinal Swedish registers and panel data models that incorporate measures of low-wage workers’ social ties to higher-educated co-workers. Our results confirm that having social ties to higher-educated co-workers increases individual chances of transitioning to better-paid employment.

We analyse the causal effect of involuntary retirement on detailed indicators of healthcare use and health status. Our identification strategy is based on a pension reform in Hungary which forced public sector workers above the statutory retirement age to full time retirement. Using rich administrative data, we find that on the three-year horizon, involuntary retirement decreases the number of primary care doctor visits, the consumption of antiinfectives for systemic use and drugs of the respiratory system, and the non-zero spending on antiinfectives, the drugs of the alimentary tract and metabolism and of the cardiovascular system. We also find that the impact on the latter two drug categories is driven by the drop in income due to involuntary retirement. The effects of involuntary retirement are comparable to the short-run effects of voluntary retirement, identified from a change in the statutory retirement age. We conclude that there is little evidence for health deteriorating effects of involuntary retirement and provide explanations for the possible mechanisms behind our results.

Motivated by the self-determination theory of psychology, we ask how simple school practices can forge students’ engagement with the academic aspect of school life. We carried out a large-scale preregistered randomized field experiment with a crossover design, involving all the students of the University of Szeged in Hungary. Our intervention consisted of an automated encouragement message that praised students’ past achievements and signaled trust in their success. The treated students received encouragement messages before their exam via two channels: e-mail and SMS message. Control students did not receive any encouragement. Our primary analysis compared the end-of-semester exam grades of the treated and control students, obtained from the university’s registry. Our secondary analysis explored the difference between the treated and control students’ self-efficacy, motivation, and test anxiety, obtained from an online survey before students’ exams. In the whole sample, we did not find an average treatment effect on students’ exam grades. However, in the subsample of those who answered the endline survey, the treated students reported higher self-efficacy than the control students. The treatment affected students’ motivation before their first exam—but not before their second—and did not affect students’ test anxiety. Our results indicate that automated encouragement messages sent shortly before exams do not boost students’ exam grades. Nevertheless, since occasionally received light-touch encouragement messages instantly increased students’ self-efficacy even before an academically challenging exam situation, we conclude that encouraging students systematically and not just shortly before their exams might lead to positive emotional involvement and help create a school climate that engages students with the academic aspect of school life.