Creating capitalist labour markets : a comparative-institutionalist analysis of labour market reform in the Czech Republic and Hungary, 1989-2002

Abstract

The present study presents a comparative neo-institutionalist analysis of labour market institutions in the Czech Republic and Hungary in the period 1989-2002. It aims to contribute to the contemporary debates on institutional continuity and change, varieties of capitalism, and post-socialist capitalist development. It presents an analytical model combining a variety of elements from different neo-institutionalist schools and applies this model to the two cases of post-socialist institutional change. The analysis presents converging and diverging developments in the two cases, and explains the direction of change. It is concluded that although both countries adopted a series of similar basic institutions, regulating the basic principles of property rights, industrial relations and the employment relationship, institutional reform at the lower levels followed quite different trajectories and labour market institutions limit the role of the market to a much larger extent in the Czech Republic than in Hungary. Also, major differences can be observed both within each case, between different institutional domains, and over time. The change of institutions in the two cases is then explained by the ideas and interests of the (domestic and international) actors shaping these institutions; their power relations and patterns of interest representation; the historical backgrounds of the cases; the international ideational context in which change takes place; and the feedback from different outcomes that the process of change produces. The similarities and differences concerning these factors, as well as the interaction between them, account for convergence and divergence between the cases.