Poverty and public works: Evidence from Hungary

Abstract

AbstractThis paper investigates how being employed in public works exposes workers and their households to poverty. Public works consist of centrally planned and financed works targeting long‐term unemployed or inactive. Evidence is primarily negative concerning improved employment trajectories, while we still know little about the poverty outcomes. To examine this, we draw on the 2014–2019 cross‐sectional data of the EU‐SILC survey for Hungary. Hungary has invested significantly in these programmes over the last few years, and since 2014, it has provided a unique opportunity to access income and public works information within EU‐SILC. Results highlight the relevance of both quantity and quality of employment. Public workers are better off than long‐term unemployed. However, they show higher poverty risk than non‐public workers (about twice as much). Living with non‐public workers substantially reduces their poverty risk, while households of only public workers struggle more to avoid poverty.