INCOME INEQUALITY IN HUNGARY, 1990-2010

Long run evolution of inequality of per capita household income

Source: Tth, 2002, 2009. Data are from: 1962-1987: Hungarian Central Statistical Office Income Survey; 1992, 1995, 1996: Hungarian Household Panel; 19992009: Trki 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

15,0

S1 S5+S6 S10

10,0

5,0

0,0 1962 1967 1972 1977 1982 1987 1992 1996 2000 2003 2005 2007 2009

1962 Atkinson Source: 19621987: KSH income surveys, AtkinsonMicklewright [1992] Table HI1.; 1992 I 2000 19921996: HHP waves IVI., 20002009: Trki Household Monitor.

Moderate decline in income inequality 2003-2007 (2)

Social and economic policies influencing income distribution Between 20022006: 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
115

Inflation (14%) nvekeds relrtken (14%)

110

105
2009/2007, %

Average income tlagos nvekeds (7%) growth (7%) No change level vltozatlan szint

100

95

90

85
) 2 3 4 5 6 7 8 ab b (1 9

* e=0.73

le ga la cs on y

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

15,0

S1 S5+S6 S10

10,0

5,0

0,0 1962 1967 1972 1977 1982 1987 1992 1996 2000 2003 2005 2007 2009

1962 Atkinson Source: 19621987: KSH income surveys, AtkinsonMicklewright [1992] Table HI1.; 1992 I 2000 19921996: HHP waves IVI., 20002009: Trki Household Monitor.

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

Ratio of lower cutpoint of top decile and upper cutpoint of lowest decile (P90/P10)
3,8 3,6 3,4 3,2 3,0 2,8 2,6 1987 1992 1996 2000 2003 2005 2007 2009
8,0 7,5 7,0 6,5 6,0 5,5 5,0 4,5 4,0

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

1987

1992

1996

2000

2003

2005

2007

2009

Gini coefficient
1 5 ,0

Relative poverty rate (OECD2: median 60%)

0,32 0,30 0,28 0,26 0,24 0,22 1987 1992 1996 2000 2003 2005 2007 2009

1 4 ,0 1 3 ,0 1 2 ,0 1 1 ,0 1 0 ,0 9 ,0 8 ,0 1987 1992 1996 2000 2003 2005 2007 2009

Forrs: 1987: KSH jvedelemfelvtel; 19921996: Magyar Hztarts Panel IVI. hullmai, 20002009: Trki Hztarts Monitor.

Megj: 95% konf. int. mellett, szemlyi ekvivalens jvedelmek szemlyi eloszlsa alapjn. Szeg. Rta 1987: e=0 ,73 alapjn

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: Trki 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 3rd quintile 4th quintile Richest quintile Total sample

Mortgages

All bank loans

Foreign currency denominated loans

Source: Trki Household Monitor

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

Percentage of households experiencing living difficulties
18 16 14 12 10 8 6 4 2 0 2001 2003 2005 2007 2009 5 5 4 4 14 14 12 10 8 15

Can't make ends meet

Source: Trki Household Monitor

Troubles paying for rent and utilities

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

Source: TRKI.

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