An atypical relation between structural change and changes in labour input: Hungary in an international comparison

The paper investigates the quality of Hungary’s structural-upgrading performance with a novel approach. It compares the evolution of the output structure with changes on the input side, more specifically, with changes in the quantity and quality indicators of labour. We find that despite the similarity between advanced and Central European economies (CEE) in terms of structural upgrading, the upgrading of CEE’s labour input was lagging much behind that of advanced economies. Hungarian performance was the worst among CEE in this respect. While technical change in advanced economies was skill-biased in the surveyed period, and demand for highly-skilled workforce increased considerably, in the surveyed CEE (and especially in Hungary) demand for the relatively-skilled labour declined, and the skill structure of persons engaged deteriorated. Transfer-driven technical change in CEE’ manufacturing industries has thus been complementary to raw, low-skilled labour and the thesis of capital/skill complementarity did not apply