Economic Reform & Income Distribution: A Case Study of Hungary and Poland

By Henryk Flakierski | Go to book overview

CHAPTER II
Distribution of Wages and
Salaries in Hungary and Poland

Hungary

Table 1 shows that we can distinguish, as far as relative dispersion of wages is concerned, two subperiods: (a) 1966-74, when the relative dispersion of wages increased, and (b) 1974-80, when a decline of relative dispersion took place. 1 Let us now analyze these two periods in more detail.

In all the analyzed state sectors apart from agriculture, the relative dispersion of earnings was more pronounced in 1974 than the prereform year of 1966, whatever statistical measure of inequality is used. 2

The increase of inequality in all analyzed sectors (except in the "nonmaterial production sector" and construction) is more pronounced in the upper tail of the distribution than in the lower one. Moreover, the relative dispersion of earnings changed faster in the extreme part of the distribution, measured by the ratios P99/ P1, P98/P2, P95/P5, than in the middle part, expressed by the ratio Q3/Q1.

The increase in the relative degree of inequality was faster in construction and transport than anywhere else, whatever statistical measures are used. The median earning in construction also grew faster than in any other sector, including agriculture, in 1966-74. By 1974 the level of the median was the highest of any sector.

This more rapid increase in relative degree of inequality in construction and transport than elsewhere was not the result solely of spontaneous forces. In 1970, when a nationwide review of pay scales was undertaken, many differentials within and

-45-

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