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Uncertainty and the demand for redistribution in Hungary

100%

Molnar G., Kapitany Z.

Kozgazdasagi Szemle (Economic Review)

2007

vol. 54

issue 3

201-232

The main objective determinants of demand for redistribution are labour-market participation, education, family structure (to some extent), and income mobility. Demand from people of low education and living on the border between activity and inactivity - the unemployed, disability pensioners, casual workers, and people living on benefits - is higher than from others, irrespective of income level. Redistribution is favoured to a less than average extent by entrepreneurs, managers and chief executives. Long-term downwardly mobile people favour income redistribution more than others, but long-term upward mobility does not decrease demand and may even increase it. The authors analyse systematic differences between factual relative and subjective income mobility. This mobility perception difference shows that perceived, not actual relative income position is the strong determinant. Underestimation of relative income position can be an important cause of high demand. A very low proportion of people are strongly opposed to redistribution. Those dissatisfied are more favourably inclined. Labour-market expectations are crucial influences on demand; the greater the employment anxiety, the greater the support for redistribution. The same applies to belief that inequalities are increasing. The most frustrated are the indecisive, with no clear idea of their future, and they are the most averse to the rich. It emerges that perception of income mobility is state-dependent and influenced mostly by uncertainty. The main policy conclusion is that reducing uncertainty on the labour market and raising educational attainment may be the most efficient government tools for lowering demand for redistribution, rather than directly increasing income.

Mobility, uncertainty and subjective welfare in Hungary.

100%

Molnar G., Kapitany Z.

Kozgazdasagi Szemle (Economic Review)

2006

vol. 53

issue 10

845-872

One of the decisive factors behind satisfaction (subjective welfare) is income mobility. Individuals usually judge change in their income position in terms of change in relative position, not in level of income. So the study analyses in the main the effect on satisfaction exerted in Hungary by objective and subjective indices of relative income mobility, in the 2000-2002 period, when the rate of growth in real incomes was exceptionally high. The findings confirm that in upwardly mobile families with increasing incomes in the period examined, the rise in relative income position did not bring added satisfaction: those whose relative position had improved were less satisfied than their attained income level would warrant. This situation pertains primarily because of uncertainty about the objective variables, when those whose incomes are rising do not expect the positive trends to persist. Those in a marginal labour market situation are more dissatisfied than others, regardless of their income, and this dissatisfaction may spread to family members in a different position. This combined sphere makes up almost a third of Hungary's population. Negative labour-market expectations are likewise factors that reduce satisfaction.

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2 Kozgazdasagi Szemle (Economic Review)

1 2007

1 2006

2 Kapitany Z.

2 Molnar G.

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Uncertainty and the demand for redistribution in Hungary

Mobility, uncertainty and subjective welfare in Hungary.