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Writers on structural change in the economy present the expansion of small business as one contributor to the process, but empirical analysis in Eastern Europe provides little support for this. The study's initial hypothesis was that the self-employed can change occupations more easily than the employed and thereby facilitate the structure-change process. Analysis of individual-level data from the Central Statistical Office labour survey, however, suggests that on Hungary's labour market, which has traditionally low mobility, the frequency of occupation change among the self-employed exceeded that among the employed at most in the early years of the 1990s.
The article describes the structure of government revenues and expenditures in Hungary, using aggregate statistics for the years between 1991 and 2003. This leads to four important observations: (1) Taxes on capital are relatively low, which may be justified in the short run by the need to encourage investment and hence accelerate the convergence to EU income levels. (2) The structure of revenues approaches the European Union's average in most dimensions. The exception to this is the distribution of taxes on capital and labour: taxes on capital are lower, while taxes and social-security contributions levied on labour are much higher than in most EU member-states, which is likely to create an incentive for unregistered employment. (3) The levels of expenditures and of public consumption are high, which may slow economic growth. Finally (4), the combined redistributive effects of revenues and expenditures seem to favour middle or high-income groups (as compared to low-income groups) more than in other EU countries.
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