CEU Electronic Theses and Dissertations, 2014
| Author | Csáfordi, Zsolt |
|---|---|
| Title | The wage curve in Hungary from the viewpoint of inactivity |
| Summary | The wage curve is an empirical law of the labor market, a negative connection between local unemployment rate and individual wages, introduced by Blanchflower and Oswald (1994), consistent with at least three theoretical frameworks, and empirically showed for several countries. Although rarely taken into account, the relevant labor force supply in measuring the wage curve consists not only of the ILO definition of unemployed, but also the inactives, many of whom return to the labor market. It might be also worth distingushing the inactives who „want to work” and those who do not. I estimate the wage curve for the corporate sector of Hungary, using Hungarian individual wage data (Bértarifa), 2002-2011. The yearly cross-section regressions explain (log) real wages with the (log) unemployment and inactivity rates of the locality, controlling for individual and company characteristics. I also estimate the wage curve on different subsamples by gender, education, company size and regions; then a panel regression with locality fixed effects, and check for robustness in various ways. The results show a stable wage curve in line with the international literature: the unemployment elasticity of wage was -0.083 on yearly average. However, there is no strong evidence that the inactivity rate is relevant for the wage curve: its coefficient on average was -0.063 for years 2002-2008 (significant only until 2004), but for 2010-2011 it even changed sign. A possible explanation for this is the increasing rigor of unemployment benefit entitlement from end-2005, which changed the group of inactives measured. In the panel model I found no evidence that the changes in unemployment would also affect the changes in wages. |
| Supervisor | Earle, John |
| Department | Economics MA |
| Full text | https://www.etd.ceu.edu/2014/csafordi_zsolt.pdf |
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