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Contents

Abstract
Non-technical summary

1 Introduction
2 The WDN wage setting survey
2.1 General survey design
2.2 The Hungarian questionnaire
2.3 The Hungarian sample

3 Results
3.1 Worker turnover
3.2 Wage setting
3.3 Wage adjustment
3.4 Adjustment to external shocks
3.5 The minimum wage
3.6 Prices and wages

4 Economic interpretations

5 Summary and conclusions

References

Appendices
A The WDN Questionnaire
B The measurement of price and wage durations
C Tables
D Charts

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Abstract

This paper presents new evidence on the flexibility of the Hungarian labor market, with special emphasis on wages. The results are based on a new survey on wage setting among Hungarian firms. The survey is part of the Eurosystem Wage Dynamics Network (WDN), and it is a harmonized questionnaire administered in 17 countries in Europe, including almost all Euro Area countries as well as five Central and Eastern European countries. The survey results show that the Hungarian labor market, while institutionally flexible, appears to be surprisingly rigid. The survey evidence points to low turnover and possibly more rigid wages than previously thought.

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