1. Data From the Tárki Household Monitor survey
István György Tóth Effects of the crisis on the income distribution in Hungary (some initial results)
Data From the Tárki Household Monitor survey

2. The context of the crisis in HU
The crisis found a country with an already large debt service
The country just passed a wave of budgetary adjustments (austerity measures) before the crisis
Hu is a small and very open economy (multinationals producing a very large part of GDP)
Among households, a large debt is taken in foreign currencies – large exposure to exchange rate volatility..

3. … has gone in the same direction. First: improvements
Social policy measures affecting the shape of the income distribution in …
Before Summer 2006 :
Public sector wage rises
Pension increases (indexation, 13th month pension)
Redirecting family support to lower income groups (abolishing family tax
allowances, raising family allowances)
Other taxes: decrease of VAT rates
After Summer 2006:
Social insurance contributions: extension, increase
PIT, EVA: special „solidarity” taxes, increase of top rates
Other taxes: VAT, duties
Layoffs in public sector
… has gone in the same direction. First: improvements
for the lower middle classes, then worsening for upper
middle classes

4. Major economic indicators, Hungary, 2000-2009
GDP growth %,
Inflation, %,
HHold consumption
Gross and net real earnings
Note same quarter of the previous year=100

5. The data series CSO Income Surveys (- 1987)
Hungarian Household Panel ( )
TÁRKI Household Monitor (1998-)

6. Themes of the 2009 Tárki Household Monitor
Major research questions:
Income distribution, poverty,
Labour market,
social stratification and inequalities,
Social and political attitudes.
Sample: N= 2048 households, N= 3670 persons.
Questionnaires: hhold and personal (16+ respondents).
Field: February-March

7. Estimates of various inequality measures and their confidence intervals between 1987 and 2009 (person ekvivalent incomes
P90/P10
S10/S1
Gini

8. Estimates for % of people and for 000 persons falling within the various median% brackets
% distribution
Well off (med 200%+)
Upper middle (med %)
Middle (med %)
Lower middle (med50-80%)
Poor (-med50%)
total
000 persons
Well off (med 200%+)
Upper middle (med %)
Middle (med %)
Lower middle (med50-80%)
Poor (-med50%)
Poverty estimates, 000 persons con. interval
Upper
lower
Total population, 000 persons
*based on st err, 95% conf int

9. Share of per capita personal income deciles from total HH disposable incomes between 1962 and 2009
Source: 1962–1987: KSH income surveys, Atkinson–Micklewright [1992] Table HI1.; 1992–1996: HHP waves I–VI., 2000–2009: Tárki Household Monitor.

10. Change in average incomes of various income deciles (person equivalent
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

11. Polarization and shrinkage of the middle class between
1987 and 2005: distribution of persons in the 1987 per capita
income deciles, based on current incomes deflated to 1987, percent
Note: 1987 decile cutpoints are deflated median growth indices.
Source: 1987: CSO Income distribution survey, 1996: HHP, 2003, 2005:
Tárki Household Monitor.

12. Shifts between income groups, and : income decile cutpoints fixed at 2005, deflated by median income growth)
2005 level
Distribution of persons, current year
Personal income deciles, based on 2005 equivalent incomes
Source: Tárki Household Monitor 2005, 2007 and 2009
Notes: distribution of persons in 2005 and 2007, within incomes 2005
income decile brackets (deflated by median incomes dynamics for 2007)

13. Persons living in households with different emplyoment composition adults (estimate, 000 persons)
head pensioner,
no employed
head pensioner,
+ employed
Hh head empl,
no other empl.
Hh head empl,
+ other empl.
Hh head
inactive

14. Summary: the combined income effects in HU … … so far
Lower real incomes, larger inequalities
Stage I (2005- mid 2006): Winners: lower middle classes and public sector employees
Stage II (mid ): Loosers: upper middle classes and public servants
Stage III ( ): loosers: lowest and (somewhat less) the upper deciles

15. Further research: a potential frame of analysis for an intergenerational assessment of the effects of the crisis
Crisis area
Financial/banking
Real/production
Social/
employment
Public finance
Dimensions
Savings, investments, pension assets
Income generating jobs
Human capital, social capital
Tax/benefit systems and in kind services
Affected groups now
Asset holders, current and future pensioners, homeowners
Employed (poor and non-poor)
„Usual”/ Traditional vulnerable groups
Cash and in kind benefit recipients
Ways how these affect future generations
Re-emerging claims to reconsider public/private pension portfolios increase strain on tax based public pensions
Poverty risk of active age families (more likely with with children)
Child poverty and deprivation in marginalised groups
Potential access restrictions to quality in pre-school institutions, schools and healthcare