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.
Steep increase in income inequalities 1987-1996 (1)
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, meanstested 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)
•rising returns to
education
•rising regional wage
differences
But
•lowering gender
wage gap
•less steep age
profile
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 year
Source: OECD Earnings Database
Moderate decline in income inequality 2003-2007 (1)
Share of per capita personal income deciles from total HH disposable incomes
between 1962 and 2009
25,0
20,0
S1
S5+S6
S10
15,0
10,0
5,0
0,0
1962
1967
1972
1977
1982
1987
1992
1996
2000
2003
2005
Source: 1962–1987: KSH income surveys, Atkinson–Micklewright [1992] Table HI1.;
1992–1996: HHP waves I–VI., 2000–2009: Tárki Household Monitor.
2007
2009
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.
The crisis years, changes between 2007-2009 (1)
Change in average incomes of various income deciles (person equivalent*
income) between 2007 and 2009
Inflation (14%)
Average income
growth (7%)
No change level
* e=0.73
The crisis years, changes between 2007-2009 (2)
Share of per capita personal income deciles from total HH disposable incomes
between 1962 and 2009
25,0
20,0
S1
S5+S6
S10
15,0
10,0
5,0
0,0
1962
1967
1972
1977
1982
1987
1992
1996
2000
2003
2005
Source: 1962–1987: KSH income surveys, Atkinson–Micklewright [1992] Table HI1.;
1992–1996: HHP waves I–VI., 2000–2009: Tárki Household Monitor.
2007
2009
The crisis years, changes between 2007-2009 (3)
Ratio of lower cutpoint of top decile and upper cutpoint of
lowest decile (P90/P10)
Ratio of top/bottom decile shares (S10/S1)
8,0
7,5
7,0
6,5
6,0
5,5
5,0
4,5
4,0
3,8
3,6
3,4
3,2
3,0
2,8
2,6
1987
1992
1996
2000
2003
2005
2007
2009
1987
Gini coefficient
15,0
0,32
1992
1996
2000
2003
2005
2007
2009
Relative poverty rate
(OECD2: median 60%)
14,0
0,30
13,0
0,28
12,0
0,26
11,0
0,24
10,0
0,22
9,0
1987
1992
1996
2000
2003
2005
2007
2009
8,0
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
The crisis years, changes between 2007-2009 (4)
No. of Persons living in households with different emplyoment composition
adults (estimate, 000 persons)
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 (5)
Proportion of households repaying bank loans by income quintile
Source: Tárki Household Monitor
The crisis years, changes between 2007-2009 (6)
Percentage of households who have been in arrears of repaying debt during year 2009
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Lowest
quintile
2nd quintile
Mortgages
3rd quintile
All bank loans
Source: Tárki Household Monitor
4th quintile
Richest
quintile
Total sample
Foreign currency denominated loans
The crisis years, changes between 2007-2009 (7)
Percentage of households experiencing living difficulties
18
16
14
14
15
14
12
12
10
10
8
8
6
5
5
2001
2003
4
4
4
2005
2007
2
0
Can't make ends meet
Source: Tárki Household Monitor
2009
Troubles paying for rent and utilities
At-risk-of-poverty rate by age, 1992-2009 (%)
Source: TÁRKI.
A summary of poverty analysis
socio-demographic profile
•Significant increase: between 1992-1996 and 2007-2009
•Consistent high risk group
village
3+ children
inactive hh head
max. primary educ. head
Roma
consistent low risk group
Budapest
0 child
second earner in the hh
at least secondary educ.
not roma
•high risk, increased: households with at least 1 child
and for the primary educated
•low risk, decreased: head 60+,
pensioner headed hh