Employment polarisation and inequality in the UK and Hungary

This paper uses household budget survey microdata to explore the growth in household income inequality in Hungary in the period 1987-1995, and compares it with inequality in the UK in 1995-96. Decomposition of inequality according to both household characteristics and income sources shows that, while inequality did grow rapidly in Hungary over the early Transition period, several factors prevented its growth to higher levels. One of these factors, the distribution of employment and earnings between households, is explored in some detail. While there was considerable polarisation between households with and without, employed members in the UK in 1995-96, this was less of a feature in Hungary, in spite of a massive withdrawal of men and women from the labour market between 1987 and 1995. Rather, a narrowing of the gender pay gap and a continued high level of female participation in employment appears to have ensured that, even as earnings inequality in Hungary increased to the extent that it surpassed earnings inequality in the UK, the distribution of household earnings, and the distribution of household incomes, remained more equal in Hungary.