CEU Electronic Theses and Dissertations, 2022
| Author | Szabo, Lajos Tamas |
|---|---|
| Title | Essays on Topical Labour Market Issues: Evidence from Hungary |
| Summary | In my thesis I present the indirect effect of the Hungarian public work programme on wages, the effect of the labour market tightness on wages and the importance of the composition of local labour markets in employment discrimination. In every chapter I use Hungarian micro databases. The conclusion of the first chapter is that the public work programme has a negative effect on the private sector wage. This is because the programme increases the labour supply since the majority of public workers were inactive before the programme. In the second chapter I find that the labour market tightness has a positive effect on private sector wages. The third chapter (co-authored with Gábor Kertesi and János Köll\H{o}) shows that the employment gap between Roma and non-Roma depends not only on local prejudices but also on the composition of the local economy. Chapter 1 - The Effect of Public Work Programme in Hungary on Private Sector Wages I estimate the effect of the public work (PW) programme in Hungary on private sector wages by using the difference in the public worker share in small homogeneous labour markets. My results show that the PW programme has a negative effect on private sector wages due to the increasing labour supply that was induced by the programme. To date, the public work (PW) programme has been the major active labour market policy tool since 2011 in Hungary. Between 2011-2017 Hungary spent 0.58\% of GDP on PW programmes, which was the largest fund for direct job creation among OECD countries. A large portion of the public work funds was distributed among those districts which were below the country average development level. As the PW employment share was not even among districts, I can use this as a variation to identify the indirect effect of the programme on the private sector. I estimate the effect of public work programme on the private sector wage using a fuzzy regression discontinuity design. The treatment variable is the share of public workers in a district-occupational cell. According to my estimations, for the period 2013-2017 the private sector wage level is lower by 0.5\% among the elementary occupations when the public worker share increases by 1 percentage point. The total wage effect is equal to almost one-year wage growth between 2013-2017. Chapter 2 - The Effect of Tightness on Wages at the Regional Level in Central Europe In this paper, I estimate the effect of tightness (i.e., the ratio of vacancies to unemployment) on wages in two Central European countries, Hungary and Slovakia. The estimation exercise is relevant for at least two reasons. Firstly, it tests the implications of the Mortensen--Pissarides model on Central European data. Secondly, wages are a major driver of inflation and are important from other macroeconomic policy perspectives. My main contribution is to identify the effect of tightness on wages from regional heterogeneity. More precisely, I instrument tightness by the distance of a district from the Austrian border, interacted with a dummy that marks the opening of the Austrian labour market to these countries in 2011. I find a positive effect of tightness on wages in the two countries, which is in line with the conclusion of the model. In Hungary a 1\% increase in tightness leads to a 0.08\% increase in wages, while in Slovakia the coefficient is somewhat larger. Nevertheless, in both countries the increase in tightness caused roughly one half of the wage increase between 2009-2017. Chapter 3 - The Transmission of Ethnic Prejudice to Labour Market Discrimination - The Role of Small Firms co-authored with Gábor Kertesi and János Köllő The Roma is Europe’ largest and poorest ethnic minority. We analyse the employment gap between Roma and non-Roma adults in local labour markets to test the hypothesis that ethnic prejudices against a minority have a more substantial labour market impact if the proportion of small firms is high in the local economy. At small firms, the application process is less formal and there is, presumably, larger room for arbitrary decisions which can lead to discriminatory practices. We conduct the exercise using data from the 2011 census in Hungary. We use the vote share of the then far-right “Jobbik” party as a measure of general anti-Roma sentiment in a given district, and instrument it with the prevalence of foreign currency mortgage debts, a well-documented independent trigger of Jobbik support. Our results show that Jobbik votes or high share of small firms alone do not lead to significantly lower Roma employment probability while the interaction of these two factors does. The employment probability of Roma is 11 percentage point smaller in the districts, where the small firm share and Jobbik vote share is considerably larger than the country average. |
| Supervisor | Andrea Weber, Róbert Lieli |
| Department | Economics PhD |
| Full text | https://www.etd.ceu.edu/2022/szabo_lajos-tamas.pdf |
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