INCOME INEQUALITY IN HUNGARY,1990-2010

Long run evolution of inequality of per capita household income

Source: Tóth, 2002, 2009. Data are from: 1962-1987: Hungarian Central Statistical Office Income Survey; 1992, 1995, 1996: Hungarian Household Panel; 1999–2009: Tárki Household Monitor.

Increasing inequality of labour income

Shrinking share of labour income:• Employment decline (emp. rate from 76% (1990) to 58% (1996))• Increase in capital income: entrepreneurial income, privatisation

Austerity package 1995: freezing wages in public sector, means-tested family allowance, rising retirement age, tuition in higher education,

Steep increase in income inequalities 1987-1996 (1)

Inequality of gross monthly earnings of full-time employees (men and women)

Note: Data are gross monthly earnings of full-time employees in May of each year. Data source: Enterprise survey (Survey of Individual Wages and Earnings). Before 1994, workers in private enterprises of less than 20 employees were not included. Since 1994, the sample also covers enterprises with 10-20 employees. Data exclude enterprises with 5-9 employees. Data include 1/12 of non-regular payments from previous yearSource: OECD Earnings Database

•rising returns to education•rising regional wage differencesBut•lowering gender wage gap•less steep age profile

Steep increase in income inequalities 1987-1996 (1)

Moderate decline in income inequality 2003-2007 (1)

Share of per capita personal income deciles from total HH disposable incomes between 1962 and 2009

0,0

5,0

10,0

15,0

20,0

25,0

1962 1967 1972 1977 1982 1987 1992 1996 2000 2003 2005 2007 2009

S1S5+S6S10

Source: 1962–1987: KSH income surveys, Atkinson–Micklewright [1992] Table HI1.; 1992–1996: HHP waves I–VI., 2000–2009: Tárki Household Monitor.

Moderate decline in income inequality 2003-2007 (2)

Social and economic policies influencing income distribution

Between 2002–2006:•50% increase of public sector wages •Introduction of 13th month pension•Redirecting family support to lower income groups (abolishing family tax allowances, raising family allowances)•VAT reduction

After the summer of 2006:• Increasing health care insurance contribution• Increase of the upper rate of individual income tax• Increase of the rate of EVA (”standardized entrepreneur tax”)

They drive to the same direction: first the lower-middle class get better, then the status of the upper-middle class get worse.

85

90

95

100

105

110

115

legala

csonya

bb (1) 2 3 4 5 6 7 8 9

2009

/200

7, %

változatlan szint

átlagos növekedés (7%)

növekedés reálértéken (14%)

Inflation (14%)

Average income growth (7%)

No change level

Change in average incomes of various income deciles (person equivalent* income) between 2007 and 2009

* e=0.73

The crisis years, changes between 2007-2009 (1)

Share of per capita personal income deciles from total HH disposable incomes between 1962 and 2009

0,0

5,0

10,0

15,0

20,0

25,0

1962 1967 1972 1977 1982 1987 1992 1996 2000 2003 2005 2007 2009

S1S5+S6S10

Source: 1962–1987: KSH income surveys, Atkinson–Micklewright [1992] Table HI1.; 1992–1996: HHP waves I–VI., 2000–2009: Tárki Household Monitor.

The crisis years, changes between 2007-2009 (2)

Ratio of lower cutpoint of top decile and upper cutpoint of lowest decile (P90/P10)

Ratio of top/bottom decile shares (S10/S1)

Gini coefficient

2,62,83,03,23,43,63,8

1987 1992 1996 2000 2003 2005 2007 20094,04,55,05,56,06,57,07,58,0

1987 1992 1996 2000 2003 2005 2007 2009

0,22

0,24

0,26

0,28

0,30

0,32

1987 1992 1996 2000 2003 2005 2007 2009

Forrás: 1987: KSH jövedelemfelvétel; 1992–1996: Magyar Háztartás Panel I–VI. hullámai, 2000–2009: Tárki Háztartás Monitor.

Megj: 95% konf. int. mellett, személyi ekvivalens jövedelmek személyi eloszlása alapján. Szeg. Ráta 1987: e=0 ,73 alapján

8,0

9,0

10,0

11,0

12,0

13,0

14,0

15,0

1987 1992 1996 2000 2003 2005 2007 2009

Relative poverty rate (OECD2: median 60%)

The crisis years, changes between 2007-2009 (3)

No. of Persons living in households with different emplyoment composition adults (estimate, 000 persons)

0

500

1000

1500

2000

2500

3000

3500

4000

htfő fogl más nem htfő és más is foglalk htfő inaktív htfő nyugd, fogl nincs htfő nyugd, fogl van

20072009

Hh head empl, no other empl.

Hh head empl, + other empl.

Hh head inactive

head pensioner,no employed

head pensioner,+ employed

The crisis years, changes between 2007-2009 (4)

Proportion of households repaying bank loans by income quintile

The crisis years, changes between 2007-2009 (5)

Source: Tárki Household Monitor

Percentage of households who have been in arrears of repaying debt during year 2009

0%

5%

10%

15%

20%25%

30%

35%

40%

45%

50%

Lowestquintile

2nd quintile 3rd quintile 4th quintile Richestquintile

Total sample

Mortgages All bank loans Foreign currency denominated loans

The crisis years, changes between 2007-2009 (6)

Source: Tárki Household Monitor

Percentage of households experiencing living difficulties

5 54 4

8

14 14

1210

15

02468

1012141618

2001 2003 2005 2007 2009

Can't make ends meet Troubles paying for rent and utilities

The crisis years, changes between 2007-2009 (7)

Source: Tárki Household Monitor

At-risk-of-poverty rate by age, 1992-2009 (%)

Source: TÁRKI.

A summary of poverty analysissocio-demographic profile

•Significant increase: between 1992-1996 and 2007-2009•Consistent high risk group consistent low risk group

village Budapest3+ children 0 childinactive hh head second earner in the hhmax. primary educ. head at least secondary educ.Roma not roma

•high risk, increased: households with at least 1 child and for the primary educated

•low risk, decreased: head 60+, pensioner headed hh