Labour market policy and the unemployed in Hungary

Abstract

We investigate passive and active labour market policy towards the Hungarian unemployed using large samples of microdata. First, we consider the income support role of unemployment benefits showing how coverage of unemployed searchers by different benefits and UI replacement rates have changed over 1992-94. Second, we analyse disincentive effects of UI non-parametrically, exploiting a 'natural experiment' provided by a major change in rules applied only to new claims. Third, we use a parametric model to comment on the degree to which active labour market schemes are targeted on those who find it hardest to get jobs.